Kenyans may face difficult times following the festive season as lenders prepare to adjust loan interest rates in January 2023 to reflect the revised Central Bank of Kenya (CBK) base lending rate.
CBK raised its benchmark rate to 8.75 per cent during its latest Monetary Policy Committee (MPC) meeting for the second time since May to hedge the economy’s exposure to rising inflation and global risks.
This effectively means that loans and mortgages will be more expensive beginning in January when commercial banks adjust their reference rates to reflect the new CBK base lending rate.
The increase will raise the cost of credit in the country, which is currently at an average of 14%.
NCBA Bank has already informed its customers of the increased interest rates that will go into effect on January 6, 2019.
“Dear customer, this is to notify you of a change in our shilling and US dollar base lending rates from 10 percent to 11 percent per annum and 9 percent to 10 percent per annum respectively effective January 6, 2023,” said NCBA.
The interest rates were first adjusted at the end of November 2022, when the Central Bank of Kenya raised its benchmark rate to 8.25 per cent for the first time.
Kenya’s bank lending interest rate was 12.410 per cent per annum as of September 2022, an increase from the previous month’s figure of 12.380 per cent per annum.
From July 1991 to September 2022, the data, which is updated monthly, shows an annual growth rate of 16.360%.
When the economy is experiencing increased demand for loans, the costlier credit is expected to impact household borrowing to help pay for school fees and mortgages.
This is in the midst of the recovery from the Covid-19 economic difficulties, which is putting additional pressure on lending interest rates.
Read Also: Banks Restructure Loans Amounting to KSh 423.6B – CBK Report.
