13/04/2011 08:11
Thousands of households and businesses will start paying higher installments since all big banks decided to increase their base rates on the housing and business loans and the current accounts.
The increase in Euribor since early 2011 has contributed to the increase in the cost of borrowing for the banks.
Even before the recent increase in the ECB base rate by 25 base points, the domestic banks started preparing their customers for upcoming increases in their base rates by 50 base points.
The interest rate environment favours depositors, who are bombarded lately by messages on the interest rates, which in some cases might reach or even exceed 4.5%.
The price will be paid by the household and the businesses, since almost all big banks transfer the increased cost of borrowing to their customers.
Marfin was the first to increase its rates, followed by Hellenic Bank and some other smaller Greek banks.
Then, Bank of Cyprus announced yesterday that following the ECB decision to increase rates from 1% to 1.25% with effect from April 13, 2011, it decided to increase rates by 0.25% for loans granted before 1/1/08 and were connected to the bank’s base rate at that time.
Also, BOCY announced that it will amend the interest rates of the loans and current accounts granted to customers with effect (for the loans) from 13/5/2011 and (for the current accounts) from 13/6/2011.
The amendments concern the increase in the base rate of the current accounts connected to this interest rate and the loans that have been granted on or after 1/1/2008 and are connected to this rate from 5.25% to 5.75%. At the same time, the interest rate of the housing loans will increase from 3.5% to 4% and that of the businesses (loans and current accounts) from 4.25% to 4.75%.
The interest rate environment has changed in a difficult period for the Cyprus economy, which recovers gradually from the crisis.
The increase in the cost of borrowing will possibly affect the demand in main sectors of the economy – such as trade and properties – which are still dealing with the crisis.
It is also expected to increase the cost of service of the accumulate debts of thousands of businesses, which are already burdened by the highest interest rate in the euro area.
The increase in Euribor since early 2011 has contributed to the increase in the cost of borrowing for the banks.
Even before the recent increase in the ECB base rate by 25 base points, the domestic banks started preparing their customers for upcoming increases in their base rates by 50 base points.
The interest rate environment favours depositors, who are bombarded lately by messages on the interest rates, which in some cases might reach or even exceed 4.5%.
The price will be paid by the household and the businesses, since almost all big banks transfer the increased cost of borrowing to their customers.
Marfin was the first to increase its rates, followed by Hellenic Bank and some other smaller Greek banks.
Then, Bank of Cyprus announced yesterday that following the ECB decision to increase rates from 1% to 1.25% with effect from April 13, 2011, it decided to increase rates by 0.25% for loans granted before 1/1/08 and were connected to the bank’s base rate at that time.
Also, BOCY announced that it will amend the interest rates of the loans and current accounts granted to customers with effect (for the loans) from 13/5/2011 and (for the current accounts) from 13/6/2011.
The amendments concern the increase in the base rate of the current accounts connected to this interest rate and the loans that have been granted on or after 1/1/2008 and are connected to this rate from 5.25% to 5.75%. At the same time, the interest rate of the housing loans will increase from 3.5% to 4% and that of the businesses (loans and current accounts) from 4.25% to 4.75%.
The interest rate environment has changed in a difficult period for the Cyprus economy, which recovers gradually from the crisis.
The increase in the cost of borrowing will possibly affect the demand in main sectors of the economy – such as trade and properties – which are still dealing with the crisis.
It is also expected to increase the cost of service of the accumulate debts of thousands of businesses, which are already burdened by the highest interest rate in the euro area.
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