Lending criteria and overall loan terms in Cyprus remained unchanged during the fourth quarter of 2025, while demand from households rose more than expected, according to the Bank Lending Survey published on Thursday by the Central Bank of Cyprus (CBC).
Loan approval criteria remained unchanged for a sixth consecutive quarter for businesses and for an eighth consecutive quarter for households, as they continue to stand at the stricter levels reached in the second quarter of 2024 for businesses and the fourth quarter of 2023 for households. All factors affecting lending criteria and terms had a neutral impact.
Unchanged business demand
Overall loan terms and conditions also remained unchanged across all categories. However, in business lending, interest rates and bank profit margins continued to decline for a third consecutive quarter, due to increased competition and lower risk perception. In housing loans, for a second consecutive quarter, no increased competitive pressure was recorded.
On the demand side, net demand from businesses remained unchanged for a second consecutive quarter, contrary to expectations expressed in the previous survey for an increase.
By contrast, demand from households increased in both housing and consumer loans. In housing loans, the increase is mainly attributed to the lower overall level of interest rates, stronger consumer confidence, and improved housing market prospects. In consumer and other loans, the increase was even stronger than expected, mainly due to higher spending on durable goods.
The share of rejected applications remained unchanged across all categories for a third consecutive quarter. Banks do not expect any changes in the first quarter of 2026 either. Both lending criteria and loan demand are projected to remain stable across all categories.
Source: CNA