Demand for loans drops in Cyprus
Demand for loans in Cyprus continued to fall in the first quarter of 2024, with banks blaming high interest rates for the decline. According to the Central Bank’s Bank Lending Survey, banks also tightened the rules for giving loans to businesses, after three quarters of no changes. However, the rules for loans to households stayed the same.
Banks said they tightened the rules for business loans because they are more cautious about taking risks and are worried about the overall economic situation. For households, the lending rules for mortgages and consumer loans did not change, but banks made the terms for consumer credit stricter.
Both businesses and households borrowed less in the first quarter of 2024. However, there was still some demand for loans due to businesses needing funds for investments and debt refinancing.
The decline in mortgage loan demand from households was due to higher interest rates, lower consumer confidence, and a less optimistic view of the housing market.
Looking ahead to the second quarter of 2024, banks expect the lending rules for both businesses and households to stay the same.
