Kenyans may be staring at a tough times post the festive season as lenders gear to adjust their loan rates from January 2023 in line with the revised Central Bank of Kenya (CBK) base lending rate.
CBK during its latest Monetary Policy Committee (MPC) for the second time since May raised its benchmark rate to 8.75 per cent to hedge the economy’s exposure against rising inflation and global risks.
This essentially means that loans and mortgages will be costlier from January, when commercial banks adjust their reference rates to reflect the new CBKs base lending rate.
The increase will push up the cost of credit in the country which currently stands at an average of 14 per cent.
NCBA Bank has already notified its customers of the higher interest rates that will take effect on January 6 next year.
“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 rates were first adjusted at the end of November 2022, when CBK first raised its benchmark rate to 8.25 per cent.
As at September 2022, Kenya’s bank lending rate was 12.410 per cent per annum, recording an increase from the previous number of 12.380 per cent per annum for August.
The data, which is updated monthly, averages 16.360 per cent per annum from July 1991 to September 2022.
The costlier credit is expected to impact household borrowing to facilitate payment of school fees and mortgage, at a time the economy is witnessing increased demand for loans.
This is amid the recovery from Covid-19 economic hardships, putting more pressure on lending rates.
