Following the European Central Bank's decision yesterday to proceed with the second reduction of its key interest rates for this year, Bank of Cyprus announced today that it has lowered the reference rate on loans linked to the ECB's key interest rate.
Specifically, Bank of Cyprus announced a reduction in the reference rate on loans tied to the ECB's key interest rate, lowering it to 3.65% from 4.25%. The new rate will take effect on September 18, 2024. According to the bank, this is a significant reduction of 0.60%, with a meaningful positive impact on its customers, immediately reflecting in the amount of their monthly loan repayments. Nearly 8,000 borrowers whose loans are linked to the ECB's base rate will see their payments decrease immediately. Gradual reduction in mortgage loan interest rates
Additionally, the bank noted that for several months now, it has been gradually reducing the interest rates on 9,600 mortgage loans that are tied to the Euribor. For example, the Euribor, which had reached 4.14% in October 2023, has gradually declined and currently stands at 3.27%.There is also an expectation that the downward trend of both interest rates will continue.The bank refers to ECB statistics, which, as noted, show that loan interest rates for households in Cyprus have decreased by 0.71% from January to July, while during the same period, the average reduction in the EU was just 0.12%.
The European Central Bank (ECB) decided yesterday to lower its main refinancing interest rate from 4.25% to 3.65%. It also reduced the interest rate on short-term loans to banks, dropping it from 4.50% to 3.90%. Additionally, the interest rate for deposits held by the ECB was cut from 3.75% to 3.50%.
Here it should be noted that Bank of Cyprus currently has an interest rate of 5.04% for new loans, which we expect to see a decrease in after the decision of ECB.
