Prime Rate in Canada
- findbetter
- Updated: November 2, 2023
Any kind of loans you apply for carry interest rates depending on the prime rates. You may want to apply for a mortgage, personal lines of credit, car loan or credit card. The rates of interest you pay on these loans fluctuate according to the prevailing prime rate.
6.45%
Today's Prime Rate
- Updated: November 2, 2023
4.25%
BOC Overnight Rate
- Updated: November 2, 2023
The Bank of Canada (BoC) affixes a key interest rate which is the target for the overnight rate, or “overnight rate” as it is also called. The overnight rate influences the prime rate that is the cost incurred by financial institutions to borrow money. Each time the BoC raises the overnight rate, banks incur a higher charge for borrowing money. To cover the additional expense, they also raise the prime rates they charge.
The reverse is also true and lower prime rates depend on the BoC’s lower overnight rates.
Typically the Big Five Banks of Canada have a uniform prime rate. However, individual banks may charge their own prime rates. In the past times, there have been instances when banks have chosen not to lower their prime rates according to the lowered overnight rates of the BoC.
Scotiabank Prime Rate
6.45%
BMO Prime Rate
6.45%
CIBC Prime Rate
6.45%
HSBC Prime Rate
6.45%
TD Prime Rate
6.45%
RBC Prime Rate
6.45%
How does the prime rate affect mortgage rates?
Most mortgage providers in Canada offer you two kinds of mortgages. Here’s what you need to know about them.
-
Fixed Interest Mortgages:
The rate of interest payable on fixed interest mortgages remains the same all through the term of the mortgage regardless of the prevailing rates in the outside market. You should opt for this system if you suspect that there are likely to be major fluctuations in the interest rates in the market. Or, if you prefer the security of paying a fixed amount of interest all through the mortgage term. -
Variable Interest Mortgages:
The rate of interest payable on variable interest mortgages depends on the prime rate plus or minus a fixed percentage as outlined in the terms of your mortgage contract. If the prime rate goes up, you’ll pay more interest whereas if the prime rate goes down, you’ll pay a lower rate of interest. In this way, the interest rates vary by the same amount as the prime rate. Typically, the rates of interest on variable interest mortgages is lower than that on fixed interest mortgages. You’ll have to be prepared to pay high rates of interest according to the prevailing rates. However, you do have the option of switching from a variable interest mortgage to a fixed interest mortgage at any time. But, you’ll have to pay the current fixed rate of interest applicable at the time of conversion.
Historic Prime Rate in Canada
* Listing data is provided under copyright by the Toronto Regional Real Estate Board (TRREB). The information may only be used for informational purposes and must not be utilized in commercial activities or other improper uses, as it could cause legal issues. However, this data has been deemed reliable but not guaranteed accurate by TRREB nor Ratestead representatives because they do their best to ensure accuracy while relying on multiple sources without independent verification.
** Contains information licensed under the Open Government Licence – Ontario.
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