The Bank of Cyprus on Friday announced an immediate reduction in its reference rate for loans linked to the European Central Bank’s (ECB) base interest rate.
According to the bank, the rate will drop from 4.25 per cent to 3.65 per cent, effective from September 18, 2024.
The bank explained that this move is a reaction to the ECB’s decision to lower interest rates.
Moreover, the bank said that this is a “substantial reduction of 0.60 per cent which is expected to have a significant positive impact on customers”.
According to the bank, nearly 8,000 borrowers whose loans are tied to the ECB base rate will see their monthly repayments decrease immediately.
In addition, the bank highlighted that it has already started reducing interest rates on around 9,600 mortgage loans linked to the Euribor rate over the past months.
The Euribor, which had peaked at 4.14 per cent in October 2023, has since gradually declined to 3.27 per cent.
The bank also noted that the downward trend in both interest rates is likely to continue.
“ECB statistics indicate that loan interest rates for households in Cyprus have fallen by 0.71 per cent between January and July, compared to an average decrease of just 0.12 per cent across the European Union during the same period,” the bank said.
“The reduction in interest rates by the ECB, following the containment of inflation, signals a decrease in the cost of borrowing and provides an indirect boost to economic growth,” it added.
Furthermore, the Bank of Cyprus said that it is committed “to supporting the country’s real economy, businesses, and households by offering competitive rates and attractive financing terms”.
The bank added that during previous periods of rising interest rates, “it had assisted thousands of customers by adjusting their loan terms to help them cope with increased repayments”.
