Mortgage term
Prime rate
Definition
Prime rate is the benchmark interest rate that Canadian banks charge their best commercial customers. Variable mortgages, HELOCs, and lines of credit are priced as 'prime plus/minus X'. Prime moves in step with the Bank of Canada's overnight rate.
As of late 2026, prime is set by each lender individually — but they move nearly in lockstep. When the Bank of Canada changes the overnight rate, prime typically changes within days.
A variable-rate mortgage at 'prime minus 0.90%' with prime at 5.45% carries a contract rate of 4.55%. If the BoC cuts 0.25%, prime falls to 5.20% and your rate becomes 4.30% — automatically.