Cypriot households face low deposit earnings amid rising mortgage rates, CBC data reveals
New data from the Central Bank of Cyprus (CBC) shows that while interest rates on mortgages in Cyprus have risen sharply, household earnings on bank deposits remain among the lowest in the euro area. In August 2026, the average interest rate on new house purchase loans increased to 4.16 percent from 3.78 percent in July, whereas rates on new household deposits rose only slightly to 1.35 percent. This disparity highlights limited benefits for savers despite rising borrowing costs.
The CBC’s analysis points to a weaker transmission of interest rate changes to depositors in Cyprus compared to most euro area countries, partially attributed to excess liquidity and the short maturity structure of Cypriot banks. Conversely, borrowing costs for households and businesses are closer to the euro area median. Notably, the proportion of variable-rate mortgages has dropped significantly, indicating a shift toward fixed-rate loans as borrowers seek to manage interest rate risk.
Overall, the data depicts a challenging environment for Cypriot savers who face low returns, even as mortgage borrowing costs escalate. The central bank underscores the importance of this trend for banks' risk management and the broader financial health of Cyprus's economy.
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