Co-ops announce a 1% rate reduction on housing loans

Co-ops announce a 1% rate reduction on housing loans

The Co-operative Central Bank (CCB) said on Friday it would cut interest rates on all housing loans which are being serviced by 1% as of March 1st.

The decision affects positively 34,000 households which have housing loans with the Co-ops, which holds a market share of over 40% in this category.

The announcement comes after CCB`s decision in January to reduce interest rates on agricultural loans by 2% on average and a reduction in lending rates on student loans back in 2014.

“The decision is part of the Co-operative sector broader planning to gradually reduce lending rates to facilitate customers to repay their obligations and contribute to the recovery of the economy” CCB Chairman Nicholas Hadjiyiannis told a press conference on Friday.

For non performing housing loans, Hadjiyiannis said there would be a 0.5% reduction in the interest rates if a loan is restructured and a further 0.5% reduction as soon as it starts being served.

“This incentive is provided in an effort to encourage our customers to come to an agreement for their non performing loans” he noted.

The average mortgage interest rate in the Co-operative sector stands at 5.2% and will be lowered to 4.2% as of the 1st of March.

Hadjiyiannis said the effort to reduce lending rates will continue.

He also said that deposit rates will remain unchanged.

The Co-operative sector was nationalised in 2013 as the government injected €1.5 billion to cover its capital shortfall.

The funds were part of a €10 billion bailout Cyprus concluded with the Troika of international lenders (the European Commission, the ECB and the IMF).

As part of the rescue, the Co-ops implemented a restructuring plan that saw the 93 separate cooperative credit institutions merging into 18 units under the CCB.