Cyprus Mail 20 December 2024 - by Andria Kades
Bank of Cyprus on Friday announced a range of measures aimed at supporting vulnerable borrowers by lowering interest rates and ‘rewarding’ those who have been consistent with their payments.
The bank will provide a one per cent interest rate subsidy for individuals who secured housing loans under government schemes. These include programmes for young people up to the age of 41 and initiatives for property purchases in mountainous or disadvantaged areas. The measures will take effect on January 10, 2025, unless stated otherwise.
Subsidised interest rates
For young people purchasing property, the subsidy applies to loans with fixed interest rates for three years. For loans with a 3.6 per cent interest rate and a deposit exceeding 30 per cent, the rate will be reduced to 2.6 per cent.
For loans with a deposit below 30 per cent, the interest rate will drop from 3.65 per cent to 2.65 per cent. Borrowers under the scheme encouraging property purchases in mountainous or disadvantaged areas will also benefit from the same one per cent subsidy.
After the three-year fixed term, the interest rates will revert to the terms specified in the original loan agreements.
The bank has allocated €100 million for loans to first-time homebuyers purchasing properties worth up to €350,000. These loans will carry a fixed interest rate of 2.85 to 2.9 per cent for three years, depending on the deposit amount. Additionally, the bank will offer 5,000 business loans of up to €5,000 each at a fixed 3 per cent interest rate for five years. These loans aim to support energy or digital upgrades for small businesses.
Reward scheme for consistent borrowers
The bank said it would reward borrowers that have housing loans with a variable interest rate based on the European Central Bank Base Rate (ECB Base Rate) or Euribor, which were granted before 30 September 2022, based on specific criteria.
The reward is equivalent to 0.5 per cent on the interest rate for the period 30/06/24 to 31/12/24.
The scheme was announced in August and the bank specified that beyond the option of receiving reward points through the app, consumers can have their bank accounts credited with cash.
Additionally, a €5,000 personal loan can be offered with a fixed 3 per cent fixed interest rate for five years to 5,000 consistent borrowers with a housing loan.
These loans must be used to enhance the energy efficiency of their properties, such as installing photovoltaic systems.
Reduced interest rates
The Bank of Cyprus said that it “responds immediately” to ECB Base Rate reductions by lowering the reference rates for loans linked to it. Since June 2024, the ECB Base Rate has been reduced by 1.35 per cent, from 4.5 per cent to 3.15 per cent.
More than 10,000 borrowers whose loans are linked to the ECB’s Base Rate see their instalment reduced immediately, it said.
Another 8,000 borrowers with mortgages linked to Euribor have started experiencing rate reductions, with the 6-month Euribor dropping from 4.14 per cent in October 2023 to its current level of 2.64 per cent.
Charges
The bank reiterated its commitment to supporting specific demographics. Customers aged 65 and older can receive a free chequebook and maintain a savings account without administrative fees. Young people aged 18 to 25 can benefit from the new “Quick Account” product, which offers no administrative fees, a free debit card, free cash withdrawals from ATMs across Europe, free foreign currency withdrawals from international ATMs, and no foreign exchange fees for card use abroad.
