Prime Rate
Canadian Prime Lending Rate
Rates & TermsLast updated: September 2026
What is Prime Rate (Canadian Prime Lending Rate) in Canadian mortgages?
The benchmark interest rate set by major Canadian banks, typically 2.20% above the Bank of Canada overnight target rate. Variable-rate mortgages are priced as Prime +/- a spread.
How is Prime Rate calculated?
Prime Rate = Bank of Canada Policy Rate + 2.20%
Prime Rate example
If Bank of Canada rate is 3.00%, Prime Rate = 5.20%. A variable mortgage at Prime - 0.90% = 4.30%.
Related rates & terms terms
Semi-Annual CompoundingCanadian mortgages compound interest twice per year (every 6 months), not monthly like US mortgages. This affects payment calculations.AmortizationTotal time to pay off the mortgage in full. Longer amortization = lower monthly payments but more interest paid.Variable RateMortgage rate that fluctuates with the Prime Rate. When Bank of Canada raises or lowers rates, the variable rate changes. Payment may be fixed (balance changes) or adjustable (payment changes).Fixed RateMortgage rate locked for the entire term, unaffected by Bank of Canada rate changes. Provides payment certainty but higher break penalty (IRD) if broken early.TermThe length of time the current mortgage contract (interest rate, conditions) is in effect. At term end, the mortgage renews. Different from amortization.Rate HoldA lender's commitment to honour a quoted rate for a set period (typically 90-120 days) while the borrower arranges financing. Protects against rate increases during purchase negotiations.
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