Big Relief For Kenyans: Banks Slash Loan Rates Starting December

Kenyan banks have announced plans to lower interest rates on loans beginning December 2024, making borrowing more affordable for individuals and businesses.

The Kenya Bankers Association (KBA) issued a statement on Sunday, December 8, revealing that the decision to reduce rates follows recent cuts in the Central Bank Rate (CBR) by the Central Bank of Kenya (CBK).

Banks will implement progressive reductions in loan rates, adjusting further as economic policies and risk factors evolve.

“The recent successive cuts in the Central Bank Rate have implications for both deposit and lending rates in the market.

Banks are taking steps to lower interest rates and make borrowing more affordable,” the statement read.

KBA highlighted that the high cost of loans has been a significant burden, particularly in the face of rising living expenses and tough business conditions.

Lower rates are intended to provide relief to borrowers seeking loans for personal needs, business expansion, or education.

“We recognize that many borrowers continue to face financial pressures driven by the increased cost of living, delayed payments to businesses, and low consumer demand caused by reduced disposable incomes,” the statement added.

KBA Chairman John Gachora emphasized the association’s goal to make borrowing not only cheaper but also more accessible and sustainable for Kenyans.

The association also noted that while reducing lending rates, banks must balance this with the cost of deposits mobilized during a period of high-interest rates.

These adjustments are critical to maintaining the sustainability of banking operations while easing financial pressures on borrowers.

The Central Bank of Kenya lowered its base lending rate from 12% to 11.25% on December 5, citing falling global inflation.

The Monetary Policy Committee (MPC), chaired by CBK Governor Kamau Thugge, attributed the stable inflation rates in Kenya to non-food non-fuel (NFNF) inflation, which eased to 3.2% in November from 3.3% in October.

Kenya’s overall inflation remained at 2.8% in November 2024, compared to 2.7% in October, staying well within the CBK’s target range of 5±2.5%.

As global inflation continues to decline, major economies, including Kenya, are expected to gradually reduce interest rates further, creating a more favorable environment for borrowers.

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