Cyprus in second homes boost

Prospective Cyprus investors have received some good news about mortgages this week…

Cyprus's Central Bank has raised the loan threshold for mortgages on holiday homes, imposed last year to pre-empt excessive exposure of commercial banks to the sector.

Governor Athanasios Orphanides announced the Change, which raised lending limits for second homes to 70 percent of their value, compared to 60 percent imposed last year.

The move will please property developers who complained restrictions imposed last year stunted growth in the market. A Central Bank official commented: “The restriction had been taken to curb commercial bank exposure to what then appeared to be a speculative run in the island's holiday home market. Those conditions have now abated. We are not making any relaxation; we are simply reverting to what was in effect last year”.

"We now see the speculative interest has waned, and that prices have stabilised. Market conditions have changed. Qualitative data by banks and by developers suggests there has been a tapering off of this phenomenon”.

Tax data released last week showed Cyprus's revenues from property transactions were down 17 percent in the first four months of 2008.  According to Analysts, the economy is poised to expand by between 3.5 and 3.8 percent in 2008, placing average growth at 3.65 percent.