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
Worked example
If Bank of Canada rate is 3.00%, Prime Rate = 5.20%. A variable mortgage at Prime - 0.90% = 4.30%.