Syprodat: Government must do more to protect borrowers

Cyprus and its banks must do more to protect borrowers from rising interest rates, the Association for the Protection of Borrowers (Syprodat) argued on Wednesday.

In making their case for the government to do more, Syprodat emphasised that banks in Greece agreed to absorb any further interest rate hikes on mortgage loans for 12 months.

Syprodat called on the government to draw up and implement measures to protect both the borrowers and the economy overall.

“[The government] must immediately provide effective and workable solutions to the main problem of our economy,” the association said.

It further stated that nothing substantial has happened on this matter despite the recommendations made by the House president, the finance minister and central bank governor.

Syprodrat also said that Cypriot banks have high capital adequacy and liquidity, along with higher profits from the increased interest rates.

The association warned that Cyprus cannot handle another wave of non-performing loans.

It added that borrowers, consumers, small and medium businesses, and households are the backbone of the economy but are facing mounting pressures due to the increases in commodities, interest rates and other challenges.

Syprodat concluded by warning that 2023-24 will mark the year of divestment.

The association’s announcement comes as Greece earlier this month enacted policies aimed to stabilise the borrowers’ monthly payments.

A series of interest rate hikes led to a rise of about 10-25 per cent in monthly mortgage loan payments in Greece.

The Cyprus Mail reported last month that banks are also under pressure to increase interest rates on deposits but that such a development may still be a way off.

Indeed, Central Bank Governor Constantinos Herodotou recently met with chief executives of banks with an announcement later stating that the governor urged the banks to proceed as soon as possible with the evaluation of their data with regard to the level of their deposit rates.

“Deposit rates are going to rise as we go through the year but bear in mind that for about the same time as banks were paying their depositors near zero per cent, they were charged at -0.5 per cent by the ECB for their overnight deposits,” said Ioannis Tirkides, senior economist at the Bank of Cyprus.

“Banks absorbed considerable losses over a long period of time, when their Net Interest Margins, the difference between the average rate at which they lend and the average cost of their deposits, dropped considerably lower,” he added.