New mortgages jump to record high, household debt at 95% GDP

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Net new loans for house buying rose to €114 mln in June, reaching a new all-time monthly record since December 2014, when the Central Bank of Cyprus (CBC) began recording data.

The rise was driven by the government’s interest rate subsidy scheme to support those affected by the Covid-19 pandemic.

According to data released Monday by the CBC, total new loans continued to rise in June, driven by net new loans and restructurings.

Total new loans increased to €674.5 mln in June, from €415.3 mln in the previous month.

From the €674.5 mln, net new loans amounted to €291.7 mln, and restructured loans amounted to €383.9 mln.

Most of the net new loans were for house purchases rising to €113.7 mln, followed by loans to non-financial corporations over €1 mln which rose to €100.3 mln.

New loans of up to €1 mln amounted to €50.5 mln in June, while new consumer and other loans reached €13.4 mln and €12.8 mln respectively.

Most restructured loans were loans to non-financial corporations for amounts over €1 mln amounting to €273.4 mln, followed by restructured housing loans (€58.2 mln) and restructured loans to non-financial corporations for amounts up to €1 mln (€50.5 mln).

In June, the restructurings of consumer loans amounted to €6.4 mln and the restructurings of other loans to €4.1 mln.

During the six months, January – June, a total of €1.39 bln in net new loans were granted, marking an increase of 4.2% from 2020.

Private debt

Private debt in Cyprus amounted to €56.5 bln at the end of March of 2021, with household debt reaching €19.6 bln and corporate debt at €36.9 bln.

According to the quarterly financial accounts released by the CBC for Q1 2021, non-financial corporations debt was €36.9 bln corresponding to 178% of Cyprus’ GDP, a slight increase on the previous quarter.

The CBC said that corporate debt has been steadily declining since December 2016 and has registered a reduction of 34%.

At the end of March, corporate assets were €63.7 bln, 16% in cash and deposits, 5% in loans, 1% in bonds, 49% in stocks, and 29% in other financial assets.

Household debt amounted to €19.6 bln or 95% of Cyprus’ GDP.

Household assets were €54.8 bln, 61% in cash, deposits and loans, 2% in bonds, 20% in stocks and 17% in other financial assets.

Compared with the previous quarter, the household debt to GDP index marked a significant reduction of 22%.