The Central Bank of Cyprus made a significant change this week in raising the limit on the amount of money foreigners can borrow to buy a holiday or investment property on the Island. Until now all mortgages have been restricted to 60% of the value of the property but as of this week, following the issuing of a circular to all local banks, the Central Bank Governor, Athanasios Orphanides, has increased the loan to value (LTV) limit to 70%. Domestic first-time buyers remain able to borrow up to 80%.
The original impetus to the restriction, introduced last year, was to quell the level of speculative purchasing that had been taking place. Recent statistics have demonstrated that developers have been reducing the volume of stock being released into the market and this has prompted the change of heart by Orphanides.
The change will undoubtedly boost the number of purchases on the island in the coming year which will help to offset some of the downturn being felt as a result of the credit crunch, particularly amongst UK buyers who have always been keen investors in Cyprus.
