President of the Association of Cyprus Banks Aristides Vourakis on Thursday expressed optimism over continued economic growth in Cyprus, driven by recent interest rate cuts from the European Central Bank (ECB).
During a meeting on Thursday with Finance Minister Makis Keravnos, Vourakis said that these cuts are already being reflected in lending rates within Cyprus.
At the meeting, Vourakis shared the banking sector’s satisfaction with the positive trajectory of Cyprus’ economy, as well as the improved outlook recognised by bond markets and rating agencies.
“We expect steady economic progress, which will be further supported by the anticipated reduction in interest rates at a European level,” he stated.
Keravnos, in turn, voiced his appreciation for Cypriot banks’ participation in the government’s new interest rate subsidy scheme for housing loans taken out between January 1, 2022, and December 31, 2023.
The scheme, aimed at supporting first-time homebuyers with an annual income of up to €50,000, will be implemented starting in November.
“I expressed my satisfaction with the state of the banking system, its high capitalisation, and thanked the bank association president for the banks’ cooperation on the new housing loan subsidy scheme,” Keravnos said.
Vourakis also briefed Keravnos on the sector’s strong performance, noting that significant improvements have been made over the last 18 months.
When asked about the timeline for the full implementation of the ECB’s recent rate cut, he confirmed that reductions are already visible in loan rates, decreasing by 0.75 per cent, with further decreases anticipated over the next six to eight months.
He clarified that there was no delay in Cyprus’ adoption of the ECB’s interest rate cuts, as the transmission process is automatic.
“Many loans have rates set on a quarterly or biannual basis, meaning they adjust upon each review date, just as they did during periods of rate increases,” he said.
“Traditionally, those linked to the ECB’s rates move faster, while others linked to bank indexes adjust more slowly, though they are generally at much lower levels regardless,” Vourakis added.
Regarding participation in the new government-backed subsidy scheme, Vourakis explained that each bank decides independently.
However, he clarified that “traditionally, the banking sector in Cyprus has participated in all Finance Ministry programmes”.
The meeting also addressed the success of the ‘rent-for-mortgage’ scheme, which is nearing completion as the application period concludes.
Additionally, the delegation updated Keravnos on recent presentations by the association in the United States and discussed the potential for collaboration between the state and banks, in view of Cyprus’ upcoming EU Council Presidency in the first half of 2026.
Representing the Association of Cyprus Banks alongside Vourakis were vice president Antonis Rouvas and director general Michalis Kammas.
