Prime rate in Canada

The prime rate in Canada today, April 22, 2026, is currently 4.45%. The prime rate, also known as the prime lending rate, is the annual interest rate Canada’s major banks and financial institutions use to set interest rates for variable loans and lines of credit, including variable-rate mortgages.

The prime rate is primarily influenced by the policy interest rate set by the Bank of Canada (BoC), also known as the BoC's target for the overnight rate. While these rates are not the same, they are closely related. When the Bank of Canada changes the target for the overnight rate, lenders will generally adjust their prime rates within a few days.

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What is the prime rate?

When you apply for a loan with a variable interest rate, your lender will give you an annual interest rate that’s tied to the bank’s prime rate. All kinds of loans are based on this rate, including certain mortgages, car loans, personal lines of credit, and even some credit cards. Think of the prime rate as the anchor these other interest rates are based on. As the prime rate in Canada moves up or down, so too does the rate of interest you pay on your loan.

March 2026: Mortgage market update

The Bank of Canada held its overnight lending rate at 2.25% in its latest announcement in March 2026, keeping policy unchanged for three times in a row. As a result, Canada’s prime rate remains at 4.45%, where it has stayed since the Bank’s October rate cut. This continues to support stable borrowing costs for households with variable-rate mortgages, HELOCs, and other prime-linked credit products.

• Real estate update: Canada’s housing market remained steady but subdued in March 2026, with little sign of a typical spring rebound in buyer activity. According to the Canadian Real Estate Association (CREA), national home sales edged down 0.1% compared to February and were 2.3% lower year over year. Supply conditions stayed tight, helping maintain overall balance in the market. New listings declined slightly by 0.2% from the previous month, reflecting ongoing hesitation among sellers to enter the market. With both sales and listings remaining soft, the national sales-to-new listings ratio (SNLR) came in at 47.8%, comfortably within the 45% to 65% range that defines a balanced market. Price trends continued to move downward, though the pace of decline has started to ease. The MLS® Home Price Index fell 0.4% month over month, marking a smaller drop than in earlier months, while prices were down 4.7% compared to March 2025. The national average home price was $673,084, a modest 0.8% annual decrease. Inventory levels remained consistent at about five months of supply, aligning with long-term averages and giving buyers more flexibility than in previous years. However, total listings were only 1% higher than a year ago and remain below historical norms, indicating that supply is still not strong enough to shift the market decisively in buyers’ favor.

• CPI update: Canada’s inflation rate rose in March 2026, with the Consumer Price Index (CPI) increasing 2.4% year over year, up from 1.8% in February. The acceleration was largely driven by energy, particularly gasoline, with pump prices rising 5.9% annually and 21.2% month over month amid global supply pressures. Outside of energy, inflation remained more stable. CPI excluding gasoline slowed to 2.2% year over year, down from 2.4% in February, indicating that broader price pressures are still relatively contained. Base-year effects from the GST/HST break continued to weigh on annual comparisons, contributing to slower growth in categories like restaurant meals. Shelter costs remained modest overall, increasing 1.7% annually, with rent up 4.2% and mortgage interest costs rising just 0.3% year over year, continuing a steady deceleration trend. Core inflation showed limited movement, with CPI Median at 2.3% and CPI Trim at 2.2%, suggesting underlying price growth remains steady. Overall, March’s data suggests inflation is being pushed around by volatile, external factors like energy prices rather than sustained domestic demand, which gives the Bank of Canada more room to stay on hold.

Canada housing market forecast for 2026

Canada’s housing market is expected to see a slow and uneven recovery in 2026, according to the latest outlook from the Canadian Real Estate Association (CREA). National home sales are now forecast to rise just 1% in 2026, reaching 474,972 transactions. The anticipated growth is expected to be driven mainly by Ontario and British Columbia, where sales have more room to rebound following weaker recent years. Home prices are also projected to remain relatively stable, with the national average increasing 1.5% to $688,955. Looking ahead, CREA expects a gradual improvement in 2027, with home sales projected to increase by 2.1% to 485,071 units. However, this outlook remains sensitive to interest rate trends; if inflation eases and further rate hikes are avoided, activity could pick up more than currently expected, potentially pushing sales above 500,000. The national average home price is forecast to rise by 0.9% to $695,094, remaining below the pace of inflation. Overall, this points to a housing market that is stabilizing rather than accelerating, with average home prices continuing to hover around the $700,000 mark for several years.

Canadian mortgage reform update

On September 16, 2024, the federal government announced sweeping changes to mortgage qualification rules for first-time home buyers, as well as those purchasing newly-constructed homes.

As of December 15, 2024:

• 30-year amortizations will be available for all first-time home buyers, regardless of whether they have an insured mortgage. These extended amortizations are also available for any purchase of new construction.
  
  
• The maximum purchase price for an insured mortgage (where less than 20% down is paid) will be increased to $1.5 million, from the current $1 million.
  

These are some of the most impactful mortgage reforms announced since 2012, and are anticipated to increase first-time home buyers’ affordability and access to the housing market. 

Learn more about these new mortgage rule changes on the Ratehub.ca blog

How is the prime rate set in Canada?

Each bank sets its own prime rate, but the Big Five Banks usually all have the same prime rate. The prime rate is primarily influenced by the policy interest rate set by the Bank of Canada (BoC), also known as the BoC's target for the overnight rate. When the BoC raises the overnight rate, it becomes more expensive for banks to borrow money, and they raise their respective prime rates to cover the added costs. Conversely when the BoC lowers the overnight rate, banks usually lower their prime rates by the same amount. 

Is the prime rate going up in Canada?

From early 2022 to the first half of 2023, the prime rate steadily increased in response to the Bank of Canada’s efforts to control high inflation. During this period, the Bank of Canada implemented a series of 10 rate hikes, pushing its Overnight Lending Rate to 5% by mid-2023. This resulted in the prime rate rising to 7.2%.

However, that trend has reversed since June 2024. Between then and October 2025, the Bank delivered nine rate cuts. These moves brought the overnight rate down from 5% to 2.25%, the lowest level since 2022. As a result, Canada’s prime rate now sits at 4.45%, where it remains following the Bank’s March 2026 rate hold. With stronger-than-expected economic data and inflation near target, the central bank has paused its easing cycle, meaning further reductions to the prime rate are unlikely in the near term.

How does the prime rate affect mortgage rates in Canada?

There are two main types of mortgage rates in Canada – fixed and variable. When you get a fixed mortgage rate, you agree to pay the same rate over the entire course of your mortgage term regardless of what happens in the outside market. Fixed mortgages are a good option if you’re worried mortgage rates will go up, or if you want to enjoy the stability of paying the same mortgage rate until it’s time to renew.

When you get a variable mortgage rate, the rate will be expressed as the prime rate plus or minus a certain percentage. When the prime rate in Canada goes up or down, your mortgage rate will go up or down by the same amount. Variable mortgages usually come with a lower rate vs. fixed-rate mortgages when you sign up, but there’s the risk that the rate could go up (or down) during your mortgage term. Many lenders will allow you to convert a variable-rate mortgage to a fixed-rate mortgage at any time, but you will have to pay the fixed rate as of the time you decide to switch.

Let’s look at an example. If the prime rate is 3.0%, and you get a variable-rate mortgage at prime minus 0.8%, your effective interest rate will be 2.2%.

Example 1: Your original mortgage rate

prime rate - discount to prime rate = your mortgage rate

3.00% - 0.80% = 2.20% 

The prime rate can rise and fall over time, and variable-rate loans will rise and fall with it. To continue this example, if the prime rate were to increase by 0.25% to 3.25%, the interest rate on your mortgage would rise by the same amount, to 2.45%.

Example 2: Your new rate after prime rate increases during your mortgage term

new prime rate - discount to prime rate = your new mortgage rate

3.25%  - 0.80% = 2.45% (new mortgage rate)

Bank prime rates

• Tangerine Prime Rate 
• TD Bank Prime Rate 
• Scotiabank Prime Rate 
• HSBC Prime Rate 
• Bank of Montreal Prime Rate 
• CIBC Prime Rate 
• RBC Royal Bank Prime Rate