Cyclone V HPS can’t read RS232 data

I have done something very similar, using UART0. It's routed to FPGA pins, and that's correct - I think the LoanIO is if you want to use HPS pins for an FPGA peripheral. One thing I notice from your pin connections is you've not applied anything to the rts, cts etc signals. I don't know if they matter, but default values I've used are: '1' for cts, dsr and dcd, and '0' for ri. The other signals are outputs so can be ignored. This works fine for me.