Strict lending criteria for guarantees and high interest rates have led businesses and households to avoid extra expenditure, while the banks' capital challenges and negative predictions for the property market make lending more difficult. Banks are imposing stricter criteria on all loans, although the percentage of banks that announced stricter criteria has dropped to 25% compared to 38% in a previous study. According to the CB, applications for business loans fell by 13% in the final quarter of 2013 compared to 25% in the third quarter, while applications in the first quarter of 2014 are expected to be fewer. Housing loan applications dropped 25% in the last three months of 2013, remaining the same as the previous quarter, while similar figures are expected for the first quarter of this year. Demand for consumer loans also remained stable in the last two quarters of 2013 falling by 38%, while according to expectations for the first three months of 2014 the reduction will be less.

Source: InCyprus