Borrowers group demands real protection for vulnerable debtors in Cyprus

The Cyprus Borrowers Association (Syprodat) on Tuesday called for careful and balanced handling of the foreclosure issue, urging meaningful dialogue between the government, parliament, banks and social stakeholders as debate intensifies over possible legislative changes.

In a statement, the association argued that the ongoing foreclosure crisis has once again exposed one of the deepest social and economic vulnerabilities in Cyprus.

“Recent developments surrounding the issue of foreclosures bring back to the forefront one of the most serious social and economic issues affecting Cypriot society, especially for thousands of borrowers who continue to face difficulties in repaying their loans,” the association said.

Syprodat stressed that the situation requires coordinated discussion among all relevant institutions in order to reach sustainable solutions.

“The ongoing public discussion highlights the need for meaningful dialogue between the state, parliament, banks and social bodies with the aim of finding fair, sustainable and effective solutions that will protect social cohesion and strengthen confidence in the economy,” the association said.

The association emphasised that any reforms must carefully balance the protection of vulnerable borrowers with the need to maintain financial stability.

“It is important to ensure that vulnerable borrowers will have meaningful protection and real opportunities for restructuring their loans, while at the same time the financial stability of the country is maintained,” the association stated.

Syprodat also pointed to the rising cost of living and higher loan instalments caused by interest rates, which it said have created growing pressure on many households across the country.

According to the association, economic conditions and higher borrowing costs have made it increasingly difficult for some borrowers to meet their repayment obligations.

“For many of our fellow citizens, their primary residence is their only asset and the possibility of foreclosure creates intense insecurity and social concern,” the association said.

The statement comes at a time when the foreclosure debate has returned to the political agenda, with lawmakers examining possible reforms to the legal framework governing mortgages and repossessions.

Officials from the finance ministry recently told the House finance committee that a new bill regulating mortgages and foreclosures is unlikely to be submitted before parliamentary elections scheduled for May 24, 2026.

Finance ministry spokeswoman Avgi Chrysostomou-Lapathiotis told MPs that the government is still working on the legislation and that it must first be reviewed by the legal service before it can be formally submitted.

She explained that the review process will not be completed before parliament dissolves on April 23, meaning the bill will reach the legislature only after the elections at the earliest.

Chrysostomou-Lapathiotis also said the ministry aims to strengthen the role of the financial commissioner, including examining whether decisions issued by the office in debt cases could become binding.

Financial commissioner Valentina Georgiadou told the committee that legislation could also introduce a mechanism to regulate repayments after a court determines the amount of outstanding debt.

“Not everyone is insolvent and not everyone has the intention of deceiving their creditors,” Georgiadou said.

She explained that such a measure would allow borrowers and lenders to reach repayment arrangements once the size of the debt has been confirmed.

“Time would be given after the determination of how much debt there is to repay for an arrangement to be made,” Georgiadou added.

At the same time, the Association of Cyprus Banks has expressed concern about potential legislative changes, warning that repeated amendments to the foreclosure framework could weaken the system and create delays.

In a note submitted to parliament, the association said that approving certain proposals could have negative consequences for credit institutions and the stability of the financial system, while also potentially affecting Cyprus’ credit rating.

The banking association argued that the current legal framework already provides mechanisms for borrowers to seek relief, including court orders or complaints to the financial commissioner regarding charges or contractual clauses.

It also pointed out that Cyprus continues to face very high levels of private debt, a challenge repeatedly highlighted in evaluations by international institutions such as the European Commission and the International Monetary Fund.

The foreclosure issue remains closely linked to the management of non-performing loans following the 2013 banking crisis, which triggered sweeping reforms in Cyprus’ financial sector.