Bank lending criteria remain stable in first quarter of 2026

Lending criteria for businesses and households in Cyprus remained unchanged during the first quarter of 2026 compared to the previous three-month period, according to the latest bank lending survey published by the Central Bank of Cyprus (CBC).

Net demand for loans saw a marked increase from both corporate entities and households across all categories during this timeframe.

Banks anticipate that criteria for granting loans to both businesses and households will become more stringent during the second quarter of 2026.

Despite these expectations for tighter standards, the net demand for loans from businesses and households is projected to remain stable in the coming months.

The overall terms and conditions for granting new loans or credit lines to businesses became more rigorous during the first quarter of 2026 due to reduced risk tolerance, according to the Central Bank of Cyprus findings.

There was a recorded increase in the bank margin, representing the difference against the relevant reference interest rate, specifically for higher-risk loans.

Regarding the overall terms and conditions for household loans, including both housing and consumer credit, these remained unchanged during the quarter, a fact which appears to be linked to the continuing positive course of economic activity, as noted by the report.

The net demand for business loans rose specifically to satisfy the funding needs for fixed investment.

For households, the net increase in demand for housing loans is attributed to rising consumer confidence, while the uptick in demand for consumer and other loans is linked to both increased expenditure on durable goods and improved consumer confidence.

“The observed increase in loan demand, particularly from businesses for fixed investment purposes, as well as from households for consumption and housing, may be linked to the continuing resilience and adaptability of the Cypriot economy in conditions of continuing external uncertainty, as well as the maintenance of the resilience of the labour market,” stated the Central Bank of Cyprus.

Regarding housing loans, the survey showed continuing relative credit expansion during the first quarter of 2026, in conjunction with the resilience of the housing market and the positive outlook regarding household intentions for investment in property.