New CBK loan pricing model sparks lower lending costs

Borrowers are paying less for loans, new Central Bank of Kenya (CBK) data shows, as a new pricing system takes effect and passes on recent interest rate cuts...

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Borrowers in Kenya are now experiencing lower lending costs due to a new pricing system implemented by the Central Bank of Kenya (CBK). This reform, which includes a revised Risk-Based Credit Pricing Model (RBCPM), aims to make loan pricing more transparent and responsive to monetary policy changes.

The average lending rate across Kenya’s 38 banks fell to 14.8 percent in December 2025 from 15.24 percent in July of last year.
The new system requires banks to price new variable-rate loans using a public Reference Rate—initially based on the Kenya Shilling Overnight Interbank Average (KESONIA)—plus a customer-specific premium.
Equity Group CEO James Mwangi and KCB Group CEO Paul Russo have welcomed the new pricing mechanism, noting its automatic transmission of CBK rate cuts to customers.

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