Canada Prime Rates
Today's Prime Rate:4.95%
Current Bank Prime Rates
| Bank | Prime Rate |
|---|---|
TD | 4.95%* |
RBC | 4.95% |
CIBC | 4.95% |
BMO | 4.95% |
Scotiabank | 4.95% |
National Bank | 4.95% |
What is Canada's prime rate today?
The Prime rate in Canada is currently 4.95%. The Prime rate is the interest rate that banks and lenders use to determine the interest rates for many types of loans and lines of credit. These can include credit cards, HELOCs, variable-rate mortgages, car and auto loans, and much more. If you have any of these loans, changes in the prime rate will also change your debt payments and thus your GDS and TDS ratios.
Today’s Mortgage Rates
| HELOC | 1-Year Fixed | 2-Year Fixed | 3-Year Fixed | 5-Year Fixed | 5-Year Variable | |
|---|---|---|---|---|---|---|
| Lowest Rates | % | % | ||||
| Average Rates (10 Lenders) | -- | |||||
| 30-Days Change of Average Rates | -- |
| Term | Lowest Rates | Average Rates (10 Lenders) | 30-Days Change of Average Rates |
|---|---|---|---|
| HELOC | % | -- | -- |
| -Year Fixed | % | % | NaN bps lower |
| -Year Fixed | % | % | NaN bps lower |
| -Year Fixed | % | % | NaN bps lower |
| -Year Fixed | % | % | NaN bps lower |
| undefined-Year Variable | % | % | NaN bps lower |
The basket of 10 lenders includes: , BMO, TD, Scotiabank, RBC, National Bank, Desjardins, nesto, Tangerine, First National.
Prime Rate and Bank of Canada Overnight Rate
(1935 - 2025)
Canada Prime Rate Changes Since 2010
| Effective Date | Prime Rate | Change |
|---|
Canada Bank Prime Rates
RBC Royal Bank Prime Rate
RBC Royal Bank's Prime rate is currently %
RBC Royal Bank's Prime rate was changed to % from % on
Scotiabank Prime Rate
Scotiabank's Prime rate is currently %
Scotiabank's Prime rate was changed to % from % on
TD Bank Prime Rate
TD Bank's Prime rate is currently %
TD Bank's Prime rate was changed to % from % on
CIBC Prime Rate
CIBC's Prime rate is currently %
CIBC's Prime rate was changed to % from % on
BMO Prime Rate
BMO's Prime rate is currently %
BMO's Prime rate was changed to % from % on
National Bank Prime Rate
National Bank's Prime rate is currently %
National Bank's Prime rate was changed to % from % on
Canada Prime Rate Forecast
It’s expected that the Prime rate will decrease by 0.00 percentage points by June 30th, 2025, bringing Canada’s Prime rate from 4.95% to 4.95%. Looking further out to December 31st, 2025, the Prime rate is forecasted to decrease by 0.25%, which will put Canada’s prime rate at 4.70%.
Forecast of Lowest Mortgage Interest Rates as of May 24, 2025
| Date | BoC Rate | Prime Rate | 5-Year Variable | 1-Year Fixed | 2-Year Fixed | 3-Year Fixed | 5-Year Fixed |
|---|---|---|---|---|---|---|---|
| This table is populated based on the forward CORRA (Canadian Overnight Repo Rate Average) on May 24, 2025. These forecasts change frequently as market prices change. In making these forecasts, we have assumed the risk premium and the term premium to stay constant and market expectation of the risk-free rate to be correct. | |||||||
Explanation of the Prime Rate
Who Sets the Prime Rate?
Each bank or lender determines their own Prime rate. Canadian banks usually look to the target overnight rate, or the Policy Interest Rate set by the Bank of Canada (BoC). Changes in the target overnight rate are usually followed by similar changes in Prime rates. As a result, most banks and lenders in Canada have the same Prime rates.
How the Prime Rate Affects You?
If you borrow money, you are affected by the Prime rate. The interest rates of many lending products are based on the Prime rate and may go up or down when the Prime rate changes. You are also affected by the prime rate if you keep significant money in high-interest savings accounts or invest in short-term fixed-income instruments. The interest you receive on such products is strongly correlated with the prime rate.
Credit Cards
Some credit cards set their interest based on the Prime rate. Because they are not backed by an asset like a house or car, they are unsecured and will usually have high interest rates to make up for the additional risk. RBC's RateAdvantage Visa, for example, has an interest rate of "Prime + 4.99%" to "Prime + 8.99%". Based on today’s Prime rate of 4.95, this means that the current interest rate for the RBC RateAdvantage Visa ranges from 12.19% to 16.19%
Other variable rate credit cards include TD's Emerald Flex Rate Visa and National Bank's Syncro Mastercard.
Home Equity Line of Credit (HELOC)
HELOCs are almost always variable rate and based on the Prime rate. A common delta for HELOCs is +0.50%. This is described as "Prime + 0.50%" or "P + 0.50%". If the current Prime rate is 4.95%, then the rate for a HELOC at "Prime + 0.50%" would be 5.45%.
Variable Rate Mortgages
Variable rate mortgages are offered by many lenders and their interest rates are based on the Prime rate. These mortgages are "variable rate" because their interest rates can change if the Prime rate changes. Your rate will depend on your specific mortgage, property, and financial situation. Having a good credit score and mortgage insurance can usually get you the lowest mortgage rates.
TD Bank uses a different Prime rate for its mortgages. It is currently set to 5.10% compared to its regular Prime rate of 4.95%.
Car and Auto Loans
Some car and auto loans have variable car loan interest rates that are based on the Prime rate. Although they are considered secured loans, they usually have higher interest rates than mortgages. Some car dealers and manufacturers may offer special promotions, however, for low or even zero interest rates.
Prime Rate and Variable Interest Rates
When you apply for one of these variable rate loans and financial products, the interest rate will be set to the Prime rate plus or minus a number called a delta. You can think of this as a markup or discount. Although all variable rates are based on Prime, lenders can choose to set their own markup or discount based on the type of loan and the credit-worthiness of the borrower. Borrowers with a good credit score might have access to prime rates, while those with poor credit scores would have higher rates. If you have a low credit score, you might need to get a subprime mortgage from a private mortgage lender.
Variable interest rates are normally described as "Prime" plus or minus a delta (the markup or discount). This delta is usually expressed in percentage points. An example variable rate with a delta of 1% would be described as "Prime + 1%". Prime can also be abbreviated as "P" and be described as "P + 1%".
What kind of rate and delta you get depends on many factors including the type of loan or financial product you are applying for, your credit score, and your financial situation. Riskier financial products like unsecured credit cards will tend to have large positive deltas and higher rates whereas secured loans like mortgages and HELOCs will have lower rates and small or even negative deltas.
How Does the Prime Rate Impact Variable Mortgage Rates?
If you have or are considering getting a variable rate mortgage, it is important to know how changes in the Prime rate can affect your mortgage's interest rate.
Existing and Pre-approved Mortgages
If you already have or have been pre-approved for a variable rate mortgage, your mortgage interest rate has been fixed at the Prime rate plus or minus a certain rate. Your mortgage interest will then directly follow the Prime rate up or down.
For example, if your variable rate mortgage is set at Prime + 0.2% and the current Prime rate is 4.95%, then your current mortgage rate is 5.15%. If the Prime rate goes up by 0.25 percentage points to 5.20%, then your mortgage rate will increase by the same amount to 5.40%.
Most variable rate mortgages have fixed payments. This means that even if your interest rate changes, your regular payments will stay the same. However, the amount of money from each payment that goes to pay off interest and the amount of money that goes towards your principal will change.
The Prime Rate Increases
If the Prime rate goes up, your mortgage rate will increase, and more of your payment will go towards interest, and less will go towards your mortgage principal. This could mean that you pay off your mortgage slower and end up with more of your mortgage remaining at the end of your term.
The Prime Rate Decreases
if the Prime rate goes down, your mortgage rate will decrease and less of your payment will go towards interest and more will go towards your mortgage principal. This could mean that you pay off your mortgage faster and end up with less of your mortgage remaining at the end of your term.
Future Mortgages
If you plan to consider a variable rate mortgage in the future, you should know how the Prime rate affects your potential mortgage rate. As a variable rate, your potential mortgage rate will follow the Prime rate up and down. An increase in the Prime rate could make a variable rate mortgage more expensive than a similar fixed rate mortgage. Similarly, a decrease in the Prime rate could make a variable rate mortgage cheaper than a similar fixed rate mortgage.
Although variable rate mortgages are all based on the Prime rate, there is a spread over the prime that lenders set. This spread determines how much higher or lower the variable rate is relative to the Prime rate. Think of it like a markup or discount - everybody uses the same original price, but lenders can set their own prices with a markup or discount. Even if the Prime rate goes down, lenders can choose to set a larger spread so their variable rates don't change.
This happened in March 2020 when the banks followed the Bank of Canada's rate cut and dropped their Prime rates from 2.95% to 2.45%. Some banks, including RBC and BMO, then increased the markup on their variable rate mortgages so that their final rates stayed the same. This shows that you always have to do your research and check if you're really getting a good deal.
The Prime Rate and Bank of Canada Target Overnight Rate
The Prime rate has a very close relationship with the Bank of Canada target overnight rate. Since the late 1990s, the Prime rate has stayed within a 50 basis point range, around 200 basis points (2 percentage points) above the Bank of Canada rate. Since 2015, the prime rate has been 2.2% higher than the BoC policy rate. In the US, the WSJ's Prime rate index has stayed exactly 300 basis points above the Federal Reserve's Fed Funds Rate for the past two decades.
Why Does the Prime Rate Follow the Bank of Canada Target Overnight Rate?
One major reason why the Prime rate tends to follow the Bank of Canada target overnight rate is because the rate influences a bank's cost of funds, or the amount of money they have to pay in order to get cash. Banks lend to each other using the overnight rate.
If the overnight rate goes down, the banks' cost of funds also goes down. With cheaper cash, the banks can pass on the savings to their customers by lowering their Prime rate in order to remain competitive with other lenders.
If the overnight rate goes up, the banks' cost of funds also goes up. Since they have to pay more for their cash, the banks have to raise their Prime rate.
How the Overnight Rate WorksPrime Rates’ Relationship With the Bank of Canada’s Overnight Rate
It's important to note that banks, credit unions, and other lenders all set their own prime rate. They are not necessarily forced to have the same prime rate as other banks, and they do not have to increase or decrease their prime rate to match the Bank of Canada's overnight rate changes. However, competitive pressure may force them to stay in line with their competitors.
One example of this was seen during the Bank of Canada's rate cuts in early 2020 as a response to the pandemic. On March 15, 2020, the BoC announced a rate cut of 0.50 percentage points. As an example, let's take a look at MCAP, a residential mortgage lender, and ICICI Bank, which both display their prime rate history to the public.
On March 18, 2020, ICICI Bank cut its prime rate by 50 basis points to 2.95%. However, MCAP cut its prime rate by 50 basis points to 2.95% on April 1, 2020, which is two weeks later. Banks and lenders do not always change their prime rates at the same time.
Another clear example is with the rate cuts by the BoC in 2015. On January 21, 2015, the BoC had a rate cut of 0.25 basis points. However, the major banks only cut their prime rates by 0.15 basis points. For example, RBC, TD, and the rest of Canada’s Big 5 Banks cut their respective prime rates from 3.00% to 2.85%.
Sometimes the banks do not fully pass on all of the rate savings. In this example, an additional 10 basis points were kept by the banks. The banks and lenders can set their own prime rates, and history shows that they do at times deviate from the Bank of Canada.
Bank of Canada History
Canada's central banking history reflects the evolution of its financial system and the establishment of the Bank of Canada, which plays a crucial role in managing the country’s monetary policy and economic stability. Here's an expanded overview of the key phases:
1. Pre-Bank of Canada Era (Pre-1920s)
Early Banking and Provincial Banks: In the 19th century, Canadian banking was dominated by private banks, provincial banks, and chartered banks, each issuing their own currency. Provinces like Ontario and Quebec had their own notes, creating inconsistencies and instability in the money supply and banking practices.
Currency Standardization Efforts: Following Confederation in 1867, the federal government made several attempts to unify the currency system. In 1871, the Uniform Currency Act was enacted, introducing the Canadian dollar and bringing some standardization, though banks retained their powers to issue currency.
National Debates on Central Banking: Over time, as economic activity grew, debates emerged over the need for a central bank. The banking sector was initially resistant, as private banks benefitted from self-regulation and profit from note issuance.
2. The Great Depression and the Push for Central Banking (1920s-1934)
Economic Instability: The Great Depression in the 1930s highlighted Canada's need for a central institution to manage monetary policy. Canada’s economy was hit hard, with high unemployment, falling prices, and bank failures. Calls for central control of the currency grew stronger.
Macmillan Report (1933): In 1933, the Canadian government commissioned the Macmillan Commission, which studied banking reforms. The commission recommended establishing a central bank to manage the currency and stabilize the economy.
Political Support: The idea gained political traction, and in 1934, the Canadian Parliament passed the Bank of Canada Act, laying the foundation for a central bank to be responsible for monetary policy and currency issuance.
3. Formation of the Bank of Canada (1935)
Charter and Structure: The Bank of Canada was established as a privately held institution in 1935. However, in 1938, the government nationalized it, making it a Crown corporation wholly owned by the federal government to ensure it would serve the public interest.
Mandates: Initially, the Bank of Canada’s primary roles were to issue Canadian currency, serve as a banker for the government, and supervise other banks. It was also tasked with managing foreign exchange reserves and controlling inflation.
Currency Standard: Canada adhered to the gold standard until 1931, when the Great Depression forced many countries, including Canada, to abandon it. This shift allowed the Bank of Canada greater flexibility in managing the money supply without gold reserves backing the currency.
4. Post-War Economic Expansion and Inflation Control (1945-1970s)
Economic Boom: Following World War II, Canada experienced significant economic growth, and the Bank of Canada played a key role in managing inflation and stabilizing the economy. Focusing on price stability, it employed new tools like interest rate adjustments.
Currency Evolution: The bank took steps to improve the design, security, and durability of Canadian currency, issuing notes with advanced anti-counterfeit features.
Floating Exchange Rate: In 1970, Canada became one of the first major economies to adopt a floating exchange rate, allowing the Bank of Canada to focus more on domestic monetary policy adapting to changes in the global economy.
5. Modern Monetary Policy and Inflation Targeting (1980s-Present)
Inflation Control Framework: In the early 1990s, the Bank of Canada introduced an inflation-targeting policy, setting a target inflation rate of 2%, within a range of 1% to 3%. This framework became a central feature of its policy, aiming to provide price stability and foster long-term economic growth.
Financial System Supervision: While the Bank of Canada does not directly regulate commercial banks (that role belongs to the Office of the Superintendent of Financial Institutions, or OSFI), it monitors the financial system’s overall stability and provides liquidity support as a lender of last resort.
Crisis Response and Quantitative Easing: During the 2008 financial crisis and the COVID-19 pandemic, the Bank of Canada implemented unprecedented measures like quantitative easing to maintain liquidity, lower borrowing costs, and stabilize the financial system.
Public Engagement and Transparency: The bank has increased its transparency, holding regular press conferences, publishing Monetary Policy Reports, and releasing policy decisions to improve public understanding and trust in its actions.
6. Recent Innovations and Future Directions
Digital Currency Research: The Bank of Canada is currently exploring the potential for a central bank digital currency (CBDC) as digital payment methods evolve and the use of cash declines.
Climate Change and Sustainable Finance: The bank has also been assessing the risks of climate change on financial stability and exploring ways to support sustainable finance initiatives.
Technological Upgrades: The Bank of Canada has modernized its payment systems and participates in global efforts to ensure cross-border payment efficiencies.
Canada’s central banking system has evolved significantly, adapting to economic changes while focusing on monetary stability, financial system integrity, and transparency.
Prime Rate History
Prime Rate in 2018: 3.45% to 3.95%
Canada's Prime rate in 2018 rose from 3.45% to 3.95% as the Bank of Canada raised its target overnight rate from 1.25% to 1.75%. Canada's economy ran at near capacity with rising housing markets and high oil prices. Combined with a lower Canadian dollar, inflation was edging above the Bank of Canada's target of 2%. In response to inflation and strong economic growth, the Bank of Canada raised interest rates to keep inflation within their target range.
Prime Rate in 2019: Stable at 3.95%
Canada's Prime rate in 2019 remained stable at 3.95% as the Bank of Canada maintained its target overnight rate at 1.75%. Despite increasing asset prices with the S&P/TSX Composite index growing 19% in 2019 and stable global economic growth, pressures from Canada's lagging energy sector and uncertain trade relationships with US and China created a headwind to further tightening of monetary policy and rising interest rates.
Prime Rate in 2020: Crash to 2.45%
Canada's Prime rate in 2020 quickly dropped to 2.45% by the end of the first quarter as the Bank of Canada lowered its target overnight rate from 1.75% to 0.25% in response to economic pressures caused by COVID-19. Canada's GDP fell by 7.5% in March followed by a record-breaking 11.6% in April. The Bank of Canada signalled that they did not expect to raise rates until at least 2023 .
Prime Rate in 2021: Looking Upwards from 2.45%
Canada's prime rate in 2021 was stable for the year, but there were increasing signals for an increase as soon as early 2022. Canada's economic recovery had exceeded the Bank of Canada's initial expectations, prompting the BoC to initially signal for a rate hike and tighter monetary policy in mid-2022. Inflation in 2021 had also reached beyond the BoC's 2% target range, which added additional pressure to the BoC to raise rates. However, the Bank of Canada did not raise rates in 2021.
Prime Rate in 2022: Rising Rates & Rising Inflation
High inflation, record-high housing prices, and rising cost of living has been the running backdrop to Canada’s recovery from COVID-19. The Bank of Canada started off the year with a 25 basis point rate hike in March 2022. This was quickly followed by another 50 basis point rate hike in April 2022, the largest single rate hike in over 20 years. Prime rates rise throughout 2022 as interest rates soared. The prime rate in Canada ended the year 2022 at 6.45%. This rise caused trouble for some variable rate mortgage borrowers, who hit their mortgage trigger rate, which means they were not making enough payments to cover their mortgage interest.
Prime Rate in 2023: A Continued Rise in Rates
The Prime rate continued to climb in 2023, rising from 6.45% at the start of the year to 7.20% by July 2023. Afterwards, it remained steady at 7.20% until the end of the year.
Prime Rate in 2024: Fast decline
By the middle of 2024, there were strong signs that the inflation was heading down to the BoC’s target. Also, by the end of the third quarter, inflation was already back to the BoC’s target. Declining inflation meant that real rates were rising in the absence of action by the BoC. So, prime rates, which started 2024 at 7.2%, declined to 5.95% by November and are expected to decline further by the year's end.
Expected Prime Rate in 2025: Further decline
The prime rate is expected to decline further in 2025 and reach the neutral prime rate, which can be defined as a prime rate that does not accelerate or slow down economic activity. Currently, our best estimate of the neutral prime rate is 4.95%.
Prime Rates in the United States
Prime Rates in the US are similar to those in Canada. They are the base rate used by banks to determine the interest rate for loans to borrowers with good credit. They also follow the overnight rate set by central banks - in the case of the US, that would be the US Federal Reserve. In contrast to Canada, the US banking sector is diverse and distributed amongst thousands of banks. Subsequently, Prime rates in the US can vary significantly from bank to bank and region to region.
The Wall Street Journal (WSJ) publishes a Prime rate index that follows the prime rate by at least 7 of the 10 largest US banks. As of November 2024, the WSJ's Prime Rate Index is at 7.75%. The WSJ's Prime Rate Index was at 8.50% back in January 2024 and at 4.75% back in July 2022.
Disclaimer:
- Any analysis or commentary reflects the opinions of WOWA.ca analysts and should not be considered financial advice. Please consult a licensed professional before making any decisions.
- The calculators and content on this page are for general information only. WOWA does not guarantee the accuracy and is not responsible for any consequences of using the calculator.
- Financial institutions and brokerages may compensate us for connecting customers to them through payments for advertisements, clicks, and leads.
- Interest rates are sourced from financial institutions' websites or provided to us directly. Real estate data is sourced from the Canadian Real Estate Association (CREA) and regional boards' websites and documents.