Fixed-rate mortgages are gaining popularity in Cyprus as borrowers seek protection against the uncertainty of potential interest rate hikes by the European Central Bank (ECB). Banking executives highlight that locking in a fixed interest rate for a long period offers stability and protection from rising monthly payments, especially if the ECB confirms a rate increase on June 10. Customers with variable-rate loans would see their installments rise, with a 0.25% hike adding between €14 and €30 monthly depending on the outstanding loan balance.

Data from the Central Bank of Cyprus shows a significant shift toward fixed-rate lending in the corporate sector. The market share of long-term fixed-rate loans increased from 1% in 2022 to 35% in the January–October 2025 period, while variable-rate loan share dropped from 99% to 65%. This trend reflects businesses’ preference for cost stability. Additionally, the average interest rate for new corporate loans fell sharply from 5.4% in June 2024 to 3.6% in October 2025, narrowing the gap with the Eurozone median lending rate to just 0.1%.