The prime rate is the lending rate Canada’s banks and financial institutions use to set interest rates for variable loans and lines of credit, including mortgages. Tangerine’s prime rate today, December 2, 2023, is currently 7.2%.
About Tangerine’s prime rate
Unlike its digital bank competitor PC Financial, Tangerine provides its own products and services as well as posts its own prime rate. (PC Financial’s products and services are provided by CIBC, and its prime rate is based on the CIBC prime rate). That said, most financial institutions tend to post the same prime rate, and Tangerine is no exception. The current Tangerine prime rate is 7.2%.
How the Tangerine prime rate affects variable mortgage rates
When you get a variable mortgage from Tangerine, the interest rate will be expressed as the Tangerine prime rate, plus or minus a certain percentage point. For example, if the Tangerine prime rate is 3.00%, and your mortgage rate is prime minus 0.50%, your mortgage rate would be 2.50%.
- 3.00% (prime rate) - 0.50% (discount to prime rate) = 2.50% (mortgage rate).
If Tangerine were to change its prime rate, your mortgage rate would change by the same amount. For example, if the Tangerine prime rate were raised to 3.25%, your mortgage rate would rise with it to 2.75%.
- 3.25% (new prime rate) - 0.50% (discount to prime rate) = 2.75% (new mortgage rate).
How the Tangerine prime rate affects fixed mortgage rates
Unlike variable-rate mortgage, fixed-rate mortgages are not immediately affected by changes in the Tangerine prime rate. When you get a fixed-rate mortgage, your mortgage rate is guaranteed not to change for the entire term. This mitigates your risk in the event rates go up, because your rate won’t change. However, if rates go down you won’t enjoy the added benefit. Fixed rates are best if you think mortgage rates will go up, or if you want the stability of knowing exactly what rate you’ll be paying regardless of what happens in the market.
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