Credit standards for loans to enterprises and to households remained unchanged in the second quarter of 2026, compared to the previous quarter, according to the Bank Lending Survey, issued on Wednesday by the Central Bank of Cyprus. During the same period, demand for loans from households went up.
According to the Survey, on the loan supply side, credit standards for loans to enterprises and for loans to households relating to housing loans as well as consumer credit and other lending, remained unchanged in 2026Q2, compared with the previous quarter.
Neutral impact
According to the Survey, all factors relating to credit standards across all loan categories had a neutral impact in the quarter under review. Overall terms and conditions on new loans or credit lines to enterprises and for new housing loans, consumer credit and other lending to households also remained unchanged in 2026Q2 compared with the previous quarter.
As regards new housing loans to households, although overall terms remained unchanged, the Survey indicated an increase in lending rates on these loans, partly reflecting the upward adjustment in the ECB policy rates.
On the loan demand side, net demand for loans by enterprises remained unchanged in 2026Q2, compared with the previous quarter, while net demand by households increased further, both for housing loans as well as for consumer credit and other lending.
Business loans
Overall net demand for business loans remained unchanged, although lower financing needs for fixed investment by large enterprises, compared with the previous quarter, were reported, mainly in the tourism and energy sectors. According to the CBC, this appears to be partly linked to the continuing uncertainty stemming from the ongoing crisis in the Middle East and to factors affecting the expected return on investment projects involving renewable energy sources.
As regards households, the net increase in demand for housing loans is attributed to improved housing market prospects and the general level of interest rates, while the increase in demand for consumer credit and other lending is attributed to higher household spending on durable consumer goods and higher consumer confidence.
According to banks’ expectations for 2026Q3, credit standards for loans to both enterprises and households, the latter relating to both categories of loans, are expected to remain unchanged.
At the same time, net demand for loans by enterprises is expected to remain stable, while net demand by households, both for housing loans and for consumer credit and other lending, is expected to increase further.
Source: CNA
