Kenya’s New Loan Pricing System: What Changed and Why It Matters for You
Is your bank still charging you the same interest rate on your loan ? Did you know that your loan repayments could be lower now? The credit pricing model used to calculate your interest rate is no longer the same following CBK’s changes. On 1 st September 2025, the Central Bank of Kenya introduced a new credit pricing model known as the Risk-Based Credit Pricing Model. This change marks one of the biggest reforms in Kenya’s lending space in Kenya’s financial history. It is designed to make loan pricing more transparent, predictable, and fair for ordinary Kenyans who have long complained about unpredictable interest rates and hidden charges. Under this new model, every commercial bank must now calculate loan interest beginning from a single common benchmark known as the Kenya Shilling Overnight Interbank Average Rate (KESONIA) . This is the rate at which banks lend money to each other overnight. The CBK chose this benchmark because it reflects real market conditi...