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Cost of money sharply up

07/01/2011 08:12
The cost of borrowing for the Cypriot households and businesses climbed in 2010, despite the restraining of the deposit rates. The banks increased the cost of borrowing for both the housing and business loans, since “the domestic economic conditions entail increased borrowing risk”.

Business loans sharply up

According to new European Central Bank data, the interest rates for the business loans in Cyprus hit a record high in November – last seen in August 2009 – and are on top of euro area interest rates.

The average interest rate for the new business loans in Cyprus stood at 6.15% from 6.11% in October and 5.98% in November 2009.

The interest rates paid by the businesses in Cyprus are higher than that of Greece, where they stood at 5.21% against 5.09% in October.

In the euro area, the interest rate for business loans stood at 3.43% in November against 3.40% in October 2010.

Housing loans

The loans for housing purposes recorded an increase too.

They reached 4.89% from 4.71% in October and 4.83% in November 2009 and hit a 13-month high. The increase compared to October 2010 stood at 18 base points. On the other hand, the increase in the euro area did not exceed 5 base points.

In the eurozone, the interest rate for the housing loans rose to 3.66% from 3.61% in October.

In Greece, the interest rate for the housing loans stood at 4.11% from 4.12%.

Deposit rates are stable

The deposit rates in Cyprus have stabilized, reaching 3.97% from 3.96% in October and 4.11% in November 2009. The CB intervention for the restraining of rates does not seem to be fruitful at the current stage, since the interest rates remain at 4%, showing slight upward trends.

In the euro area, the average deposit rates for the bills of up to one year fell to 2.34% from 2.35% in October.

The cost of money dropped in Greece as well. The average rate for new bills declined to 3.63% from 3.67%.