NAIROBI, Kenya — Equity Bank has revised its loan pricing structure following the Central Bank of Kenya’s (CBK) decision to reduce the Central Bank Rate (CBR) from 9.00 per cent to 8.75 per cent, effective February 10, 2026.
In a notice issued to customers on Wednesday, the lender said all new Kenya shilling-denominated variable-rate loans will now be priced at the prevailing benchmark rate, currently the CBR at 8.75 per cent, plus a premium determined by customer risk profile and product category.
Impact on existing borrowers
Equity clarified that existing variable-rate loans already priced on the CBR plus a premium will retain the same pricing formula.
However, the CBR component will adjust downward from 9.00 per cent to 8.75 per cent after 30 days from the date of the notice, in line with standard loan repricing cycles.
For customers holding older Kenya shilling variable-rate facilities disbursed before December 1, 2025, the bank said those loans will continue to be priced on the Equity Bank Reference Rate (EBRR) plus margin for now.
The facilities are scheduled to transition to the CBR-plus-premium framework on February 28, 2026, as previously communicated to borrowers.
What this means for customers
While monthly instalments and loan tenures remain unchanged, Equity noted that adjustments to the benchmark rate may affect the total interest payable over the life of the loan.
A lower CBR typically reduces borrowing costs for variable-rate facilities, although the actual savings depend on the loan size, remaining tenure and applicable premium.
Also Read: Central Bank of Kenya lowers base lending rate to 9%
Customers have been advised to review updated repayment schedules and consult relationship managers or visit branches for clarification. The bank’s customer contact centre can also be reached via 0763 000 000.
Broader monetary policy context
The CBK’s decision to trim the benchmark rate reflects ongoing efforts to balance inflation control with economic growth support.
Kenya’s inflation has remained within the target band of 2.5 to 7.5 per cent in recent months, creating room for cautious monetary easing.
Lower policy rates generally aim to:
- Reduce the cost of credit for households and businesses
- Stimulate private sector borrowing
- Support economic activity
Commercial banks typically adjust lending rates in response to CBR changes, although the speed and extent of transmission vary across institutions.
Shift to risk-based pricing
The migration from internal reference rates such as EBRR to CBR-linked pricing aligns with broader regulatory reforms encouraging greater transparency and market-based loan pricing.
By anchoring variable loans directly to the CBR, banks provide borrowers with clearer visibility on how policy rate changes influence their borrowing costs.
Financial analysts say the transition could enhance competition in Kenya’s credit market, particularly as lenders recalibrate risk premiums in a moderating interest rate environment.
