Recent data reveals that Cyprus is facing a troubling rise in non-performing loans (NPLs), which have now exceeded the peaks observed during the 2013 financial crisis. According to confidential information from the Central Bank of Cyprus, outstanding NPLs have climbed to over €25 billion, eclipsing the previous high of around €15 billion recorded in 2013. This increase signals increased pressure within the property-linked lending sector, raising concerns ahead of the upcoming parliamentary elections in May.
While commercial banks have aggressively offloaded large portions of their bad debt, the system is not out of the woods yet. Vulture funds own a significant share — 141,478 loans with a face value of €3.2 billion, purchased at a steep discount. Yet, these funds have already collected €5.7 billion to date, a combination of cash repayments, property recoveries, and debt-for-property swaps. Despite this, the portfolios held by these investors have swelled to €18.5 billion, fueled by ongoing compound interest accumulation.
The state-owned asset management company, KEDIPES, carries a heavy burden with 77,561 former co-operative bank loans initially valued at €7.5 billion. As of June 2025, these loans still show an outstanding balance of €5.7 billion, with about €5 billion classified as non-performing. Meanwhile, the core banking sector appears relatively stable, holding just 24,736 NPLs worth €1.45 billion — a slight improvement from December 2024.
This shift in debt ownership has important political implications. Many argue that because banks have drastically reduced their exposure to distressed loans, reforming foreclosure legislation now carries a lower systemic risk compared to the crisis era. Among the multiple proposals scheduled for discussion on March 9 is one from Marios Garoyian of DEPA, recommending suspension of foreclosures on primary residences valued up to €350,000 until year-end. Other suggestions include stronger oversight by the Financial Commissioner and caps on accrued interest.
With NPLs now eclipsing crisis-era levels, the government faces its most significant legislative challenge in over a decade. The outcome will have far-reaching consequences for Cyprus’ real estate and lending framework, affecting homeowners, investors, and the market alike.
For buyers navigating this complex environment, cheap apartments for sale in Cyprus and auction properties in Cyprus remain attractive options worth exploring during these turbulent times.
Support
Information
