Could Your Mortgage Rate Go Up? What the Latest Court Ruling Means

On 13 August, the High Court temporarily suspended a requirement under Section 44 of the Banking Act that requires banks to get approval from the National Treasury before increasing interest rates on loans.
In simple terms, banks currently have more room to adjust loan rates without first going to the Treasury for approval.
Whether your rate can change will still depend on the terms of your mortgage agreement, including whether you have a fixed or variable rate.
Don’t assume your mortgage rate is going up. But do understand the terms of your loan and keep an eye on any changes from your bank.

You take out a mortgage, agree on an interest rate and work out a monthly repayment you can live with.

Then you hear that banks may now be able to increase loan rates without getting approval from the Treasury.

Naturally, you might be wondering: Could my mortgage repayment suddenly go up?

Well, not necessarily.

Here’s what has actually happened.

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So, what’s changed?

On 13 August, the High Court temporarily suspended a requirement under Section 44 of the Banking Act that requires banks to get approval from the National Treasury before increasing interest rates on loans.

The order is temporary and will remain in place as the legal case continues through the appeal process.

In simple terms, banks currently have more room to adjust loan rates without first going to the Treasury for approval.

But this doesn’t mean banks have been told to increase your interest rate.

And it doesn’t mean everyone’s mortgage repayment is about to change.

Why did this happen?

This is part of a much longer disagreement between banks, the Treasury and the Central Bank of Kenya (CBK) over who should have the final say when loan interest rates change.

The Kenya Bankers Association (KBA) has argued that banks should be able to adjust lending rates in response to changes in monetary policy without needing approval from Treasury.

The issue has been through the courts before. In 2024, the Supreme Court ruled that banks did need Treasury approval before increasing loan interest rates.

KBA challenged the issue again, and the latest High Court order has temporarily changed the position while that legal process continues.

So, this isn’t a brand-new rule. It’s the latest development in a legal dispute that’s been going on for a while.

What does this mean if you have a mortgage?

This is probably the part you actually care about.

You don’t need to panic.

The court order does not automatically increase your mortgage rate or your monthly repayment.

Whether your rate can change will still depend on the terms of your mortgage agreement, including whether you have a fixed or variable rate.

If you have a variable-rate mortgage, however, it’s worth keeping an eye on communication from your lender because your repayment can be affected when your interest rate changes.

And remember, a change in the interest rate doesn’t just mean paying a little more each month. Over a long mortgage term, even a small increase can add a significant amount to the total cost of your home.

What if you’re thinking about taking a mortgage?

This is actually a good reminder to look beyond the interest rate you’re being quoted.

Before signing a mortgage, ask:

Is the rate fixed or variable?
Under what circumstances can it change?
How much would my repayment change if the rate went up?
Are there any other charges I should know about?

Because when you’re taking a 15- or 20-year loan, the rate you start with isn’t the only number that matters.

So, where does this leave us?

For now, banks have temporary room to adjust loan rates without getting prior Treasury approval. But the legal battle isn’t over, and the court has not permanently removed the requirement.

For borrowers, the takeaway is much simpler:

Don’t assume your mortgage rate is going up. But do understand the terms of your loan and keep an eye on any changes from your bank.

Because when you’re borrowing money for 20 years, a small change in the rate can make a surprisingly big difference.