Prime rate in Canada

What is the prime rate?

The prime rate, also known as the prime lending rate, is the annual interest rate that Canada’s major banks and lenders use to set interest rates for variable-rate financial products. This includes variable-rate mortgages, home equity lines of credit (HELOCs), personal lines of credit, and some business loans. When you borrow using a variable interest rate, your lender will typically quote your rate as “prime plus” or “prime minus” a certain percentage. For example, if the prime rate is 4.45% and your mortgage rate is prime minus 1.00%, your effective mortgage rate would be 3.45%.

What is the current prime rate in Canada?

The prime rate in Canada today, June 11, 2026, is currently 4.45%. The prime rate is closely tied to the Bank of Canada’s overnight lending rate, which currently sits at 2.25%. Since the BoC has held this benchmark interest rate steady since October 2025, Canada’s prime rate has also remained unchanged over that period.

How does the prime rate affect mortgage rates in Canada?

The prime rate directly affects variable mortgage rates in Canada. When the Bank of Canada raises or lowers its overnight lending rate, lenders typically adjust their prime rates by the same amount, which then changes borrowing costs of variable-rate mortgages.

For borrowers with variable mortgages, changes to the prime rate can impact:

• Monthly mortgage payments- For borrowers with adjustable-rate mortgages, monthly payments typically rise or fall whenever the prime rate changes. If the Bank of Canada raises interest rates, mortgage payments usually increase as well. Some variable mortgages have fixed monthly payments instead. In these cases, payments may initially stay the same even when rates rise.
• How much interest you pay over time- For borrowers with fixed-payment variable mortgages, monthly payments stay the same even when rates increase. Instead, a larger share of the payment goes toward interest costs, while less goes toward paying down the mortgage principal. Over time, this can increase the total amount of interest paid over the life of the mortgage. 

If rates rise significantly, some borrowers may eventually reach their trigger rate, which happens when the regular payment no longer covers enough interest to keep the mortgage amortizing properly. When this occurs, lenders may require borrowers to increase their payments or switch to a different payment structure.

Canada prime rate history from 2010 to 2026

Canada’s prime rate has moved through several major economic cycles over the past decade, reflecting shifts in inflation, economic growth, and Bank of Canada monetary policy. The table below shows how Canada’s prime rate has changed over time.

June 2026: Mortgage market update

The Bank of Canada held its overnight lending rate at 2.25% in its latest announcement on June 10, 2026, keeping policy unchanged for five 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.

What’s the difference between the prime rate and the overnight rate?

The overnight rate is the benchmark interest rate set by the Bank of Canada that financial institutions use to lend and borrow funds between one another for short-term needs. The prime rate, on the other hand, is the interest rate commercial banks and lenders use to price variable borrowing products for consumers.

Because lenders use the overnight rate as a foundation for their own borrowing costs, changes to the Bank of Canada’s policy rate typically lead to corresponding changes in the prime rate. When the Bank raises or lowers its overnight rate, Canada’s major banks generally adjust their prime rates by the same amount within a few days. The prime rate is always higher than the overnight rate because lenders add a spread to account for funding costs, operational expenses, and lending risk.

How is the prime rate set in Canada?

Canada’s prime rate is not directly set by the Bank of Canada. Instead, each financial institution determines its own prime lending rate based on broader market conditions and the Bank of Canada’s overnight rate. In practice, Canada’s major banks typically move their prime rates in lockstep because they face similar borrowing costs and competitive pressures. As a result, the Big Five Banks usually maintain nearly identical prime rates, though there can occasionally be outliers

When the Bank of Canada raises its overnight rate, borrowing becomes more expensive for lenders. Banks generally respond by increasing their prime rates to offset higher funding costs. When the Bank lowers rates, lenders typically reduce their prime rates as well. While prime rates almost always follow Bank of Canada decisions, lenders are not legally required to adjust them 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 June 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.

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