Renewed attention on borrowing costs following the latest increase in interest rates by the European Central Bank (ECB), is raising questions over whether Maltese households and businesses could eventually see higher loan repayments.

Responding to questions from WhosWho.mt, an APS Bank spokesperson said its position remains similar to that adopted during the ECB’s previous monetary tightening cycle in 2022 and 2023.

“Historically Maltese banks had a lower interest rate pass-through than European banks and, speaking solely for APS Bank and thanks to our business model, we were not planning to increase interest costs for our borrowers,” the spokesperson said, recalling its position at the time.

“Our replies today are the same, that we do not plan to pass on the interest rate increases to our borrowing customers.”

APS stressed that its position is not necessarily permanent, with decisions being kept under review, particularly if the ECB's tightening cycle proves prolonged or further interest rate increases follow.

BOV to announce latest rates later this month

BOV, meanwhile, stopped short of indicating whether its lending rates will change following the latest ECB decision.

Responding to WhosWho.mt, the bank said its Bank Base Rates are communicated quarterly through company announcements.

Its latest announcement, issued in June 2026, covers the period up to 30th September 2026.

BOV's current Business Bank Base Rate and Home Loans Bank Base Rate both stand at 2.15 per cent per annum, while its Personal Loans Bank Base Rate stands at 2.45 per cent.

The bank confirmed that its next communication on base rates will be issued later this month.

“As this information may be market-sensitive, it cannot be disclosed prior to its official publication,” BOV said.

This means borrowers will have to wait for the upcoming company announcement to see whether the bank maintains or adjusts its existing rates.

Why Malta can react differently to ECB decisions

The question of whether ECB rate movements translate into changes for Maltese borrowers is particularly significant because Malta has historically recorded a much weaker interest-rate pass-through than much of the euro area.

Previous Central Bank of Malta research found Malta's pass-through rate to be the lowest in Europe, with the mortgage pass-through rate standing at 0.09 at the time – meaning that mortgage interest rates increased by just 0.09 percentage points for every one percentage point increase in ECB rates.

One factor behind this relative insulation has historically been Maltese banks' strong deposit bases. Rather than relying heavily on more expensive external or central-bank funding, local banks have been able to fund a substantial part of their lending through customer deposits.

During the previous tightening cycle, BOV had similarly pointed towards its strong liquidity position as a factor reducing pressure to immediately adjust its rates.

More recently, University of Malta economist Philip von Brockdorff told TVM that whether the latest ECB increase ultimately reaches Maltese borrowers remains a decision for individual banks.

Developments elsewhere in Europe nevertheless show that borrowing costs have already been responding to the changing interest-rate environment. Recent reporting by Euronews found quoted fixed mortgage rates ranging from around 2.2 per cent in Spain to an average of 4.46 per cent in Germany, although differences in mortgage terms mean the figures are not directly comparable.