The data also shows that there was a significant decline in non-performing loan portfolios in banks which have deleveraged through real estate swaps. The state of play in banks has changed significantly since 2013 with liquidity tightness turning into surplus.

With liquidity at satisfactory and in some cases excessive levels, banks are now stepping up efforts to channel money especially towards housing loans. Loan schemes on the market focus on purchase, construction, completion or refurbishment of a home or apartment or even the transfer of an existing mortgage.

Banks give a grace period of up to two years before the loan’s first disbursement, as well as the possibility of granting additional credit facilities to meet personal or consumer needs.

Interest rates offered by banks are fixed or floating and start at less than 2%. Instalments are low, starting from €300 per month. According to the data of the Central Bank, there was an overall €13 billion decrease in loans over the last year and an overall decrease of €1.7 billion in deposits.

In February this year, bank deposits outperformed loans by €9.5 billion against a negative deviation of €1.9 billion which was the difference a year ago. It is no coincidence that the Cypriot banking system recorded the second highest liquidity coverage index within Eurozone.

Its liquidity coverage ratio in the fourth quarter of 2018 is 311%, far exceeding 146% which is the Eurozone average and about three times the 100% set by the Basel III Directive.

Source: InCyprus