Lending rates go up

The interest rates of the new business loans hit a record high last seen in October 2008, restricting further the recovery prospects of the economy and aggravating the prevailing negative climate.

According to new European Central Bank data released on Thursday, the interest rates of the business loans in Cyprus hit a 33-month high in July, reflecting the changes in the global financial environment and the estimates of the domestic banks for the risks threatening the domestic system.

Since April, the European Central Bank increased its rates by 50 base points, confirming estimates for a gradual change in the environment of low rates.

At the same time, the risks for the domestic economy seem to have increased due to the fiscal problems and the macroeconomic condition from the disaster in Vassiliko.

Under the circumstances, the interest rates for the business loans reached 3.78% against 3.72% in June 2011.

The interest rates of the housing loans increased too, amid the negative conditions in the property market.

Specifically, they recorded an increase to 5.46% against 5.35% in June and 4.45% in July 2010. It is the highest since August 2009.

On the other hand, the interest rate of the housing loans in the euro area remained stable at 4.10% from 4.09%.

The deposit rates recorded an increase in July but remain close to 4%.

The interest rates for new deposits in Cyprus stood at 4.11% from 4.02% in June and 3.92% in July 2010.

In Greece, the cost of absorbance of deposits reached 4.28% against 4.08% in June.

In the euro area, the average deposit rates for bills of up to one year rose to 2.47% from 2.58%.