Some commercial banks in Kenya have hiked their interest rates on loans to as high as over 26 per cent. The hike in interest rates on loans follows the increase of the benchmark lending rate by the Central Bank of Kenya in December 2023 and February 2024.
Among lenders who have hiked their interest rates is Equity Bank, which is now charging 26.74 per cent on new loans taken by risky borrowers.
The bank has also adjusted its reference rate from 17.56 per cent to 18.24 per cent.
“Following the adjustment of the Central Bank Rate (CBR) from 10.5 to 12.5 per cent in December 2023 and from 12.5 per cent to 13 percent in February 2024, Equity Bank wishes to notify our customers and the general public, that the bank shall, effective February 20, 2024, adjust Equity Bank’s Reference rate (EBRR) from the current 17.56 to 18.24 percent,” Equity Bank said in a notice message sent to its customers.
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The bank further added; “Consequently, the final interest rate shall be Equity Bank’s Reference Rate of 18.24 per cent plus a margin currently at a maximum of 8.5 per cent per annum.”
In December 2023 after the upward adjustment of the base lending rate by the CBK, the NCBA Bank increased its base lending rate to 16.5 per cent up from 14.5 per cent.
The CBK raised the base lending rate for the second time in a span of two months in early February.
In the review made on February 6, 2024, the CBK raised the base lending rate from 12.5 per cent to 13 per cent. The new rates are now the highest rates since November 2012.
“The Monetary Policy Committee noted that overall inflation has remained sticky in the upper bound of the target range. The Committee further observed that all key components of inflation-fuel, food, and NFNF had increased in January,” a statement from the CBK stated.
“In addition, the MPC noted the continued, albeit reduced, pressures on the exchange rate and therefore concluded that further action was needed to stabilise prices.”