Lending criteria for businesses and households in Cyprus remained unchanged during the first quarter of 2026, according to the latest Central Bank of Cyprus survey. Despite stable conditions, a marked increase in net demand for loans was observed from both corporate entities and households across all categories.

Banks signaled expectations of tighter lending standards in the second quarter, although loan demand is predicted to stay stable. The stricter terms for business loans were driven by reduced risk tolerance and increased bank margins on higher-risk loans. Conversely, loan conditions for households, including housing and consumer credit, stayed steady, reflecting continued positive economic activity.

The rise in business loan demand was mainly to fund fixed investments, while household demand for housing loans and consumer credit rose due to greater consumer confidence and increased spending on durable goods. The Central Bank of Cyprus highlighted that these trends demonstrate the economy’s resilience amid external uncertainties and a stable labor market, supporting ongoing credit expansion especially in the housing sector.