Cyprus Banks Reacting to ECB Interest Rate Cuts

The European Central Bank (ECB) has reduced interest rates for the second time since June. The deposit rate, which is the ECB’s primary tool, was lowered from 3.75% to 3.5%, aligning with widespread expectations.

Positive signs of the rate cuts for borrowers were immediate, as such;

The Bank of Cyprus announced that it has decided to lower its reference interest rate for loans linked to the ECB’s Base Rate. Starting from September 18, 2024, the rate will drop from 4.25% to 3.65%. This change is expected to benefit around 8,000 borrowers by reducing their monthly loan payments.

Additionally, the bank mentioned that it has begun to gradually lower interest rates on another 9,600 housing loans linked to Euribor. The Euribor rate has steadily decreased from 4.14% in October 2023 to 3.27% at present.

Hellenic Bank introduced the “First-time Homeowners” plan offering a preferential fixed interest rate for the first few years of the loan, as well as cashback opportunities.

The other banks situated on the island are expected to follow the trend.

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