INTEREST rates for house purchase and for consumer credit continued their downward trend, falling to a new lowest point since November 2007, when data is available.
The interest rate for consumer loans dropped in July to 4.01% from 4.47% in the previous month.
According to data released Thursday by the Statistical Service of Cyprus, the main developments in interest rates on new loan and deposit contracts, including existing contracts which were renegotiated, are summarised as follows:
Deposit interest rates
The interest rate on deposits from households with an agreed maturity of up to one year recorded a marginal increase to 1.51%, compared with 1.49% in the previous month.
The corresponding interest rate on deposits from non-financial corporations decreased to 1.39%, compared with 1.45% in the previous month.
Lending interest rates
The interest rate on consumer credit registered a decrease to 4.01%, compared with 4.47% in the previous month.
The interest rate on loans for house purchase also fell to 2.94%, compared with 2.99% in the previous month.
The interest rate on loans to non-financial corporations for amounts up to €1 million remained unchanged at 4.23%, compared with the previous month. In contrast, the interest rate on loans to non-financial corporations for amounts over €1 million recorded a decline to 3.71%, compared with 3.76% in the previous month.
I had 2% on my loan in BAC on my holiday house. This rate I have been having for several years.
I imagine the majority are foreign. Understanding the reason would be useful. A loan is a loan after all. It is unethical to pass on interest rate cuts whilst refusing to lower the rate for one particular type. Each product has it’s starting rate and should be adjusting across the range. BTW, my interest rate was agreed as 2% plus libor. The bank broke this agreement after the financial crash. It is now 5.5% plus libor and has been for some time. If interest rates are now dropping I should benefit.
Ed: Considering that foreigners only account for around a quarter of property sales there are many more Cypriots having issues with their loans. If your loan agreement with the bank states that you have a fixed interest rate of 2% + LIBOR, the you should take this further.
I haven’t seen any reduction in the interest rate on my BoC “housing loan”. Still sits at 5.5% or thereabouts. When I’ve questioned this I was advised reductions were not applied to loans for holiday houses.
Feels like blatant discrimination by the banking sector against foreign buyers.
Ed: You need to remember that it isn’t only foreigners who buy holiday homes. Many more are bought by Cypriots – they also face this problem.