Local commercial and cooperative banks have agreed to gradually reduce loan interest rates, as well as the cost of restructuring existing loans, according to a statement from the Central Bank of Cyprus.
Discussion between representatives of credit institutions and Central Bank Governor Panicos Demetriades took place “in a climate of mutual understanding and the need for a gradual reduction of loan interest rates as well as further action with a view of reducing restructuring costs in the immediate future was recognized by all.”
With the €10 bln bailout programme, austerity measures and harsh credit controls in place, money supply in the market has dwindled hurting all commercial activity, while fresh lending has dried up and individuals as well as companies have nowhere else to turn to for funding.
Bank of Cyprus, which remains without a CEO for nearly two weeks, is expected to launch a new campaign targeting housing loans and deposits, with the new Housing Loan Scheme offering a 4.75% interest rate (APR 4.85%) for loans of up to €200,000, with several features, including a grace period for the repayment of the capital and a bonus discount on interest for prompt repayment.
Local banks had also relaxed their security requirements for the restructuring of loans for credible clients from 110% to 105% in August.
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