How prime affects your mortgage
A variable mortgage is quoted as prime minus a discount (e.g. prime − 0.90%). At a 5.95% prime, that’s 5.05%. If the Bank of Canada cuts 0.25%, prime usually drops to 5.70% and your rate falls with it; a hike does the reverse. A HELOC is prime plus a margin. Fixed mortgages are locked for the term and aren’t affected by prime moves.
Prime rate — FAQ
What is the prime rate in Canada today?
The benchmark prime rate used by Canada's major banks is currently 5.95% (as of May 13, 2026). Most lenders share the same prime; a few set it 0.15% higher.
Who sets the prime rate?
Banks set their prime rate, but it moves in lock-step with the Bank of Canada's overnight policy rate — typically prime = overnight rate + ~2.20%. When the Bank of Canada hikes or cuts, prime follows within days.
How does prime affect my mortgage?
It drives variable-rate mortgages and HELOCs. Your variable rate is quoted as 'prime − X' (or 'prime + X' for a HELOC). When prime moves, your rate — and usually your payment — moves with it. Fixed-rate mortgages are not affected during the term.
If prime drops, does my payment drop?
On most variable mortgages, yes — though some 'fixed-payment variable' products keep the payment level and change how much goes to principal. We confirm which type you have and model both.
Prime vs. mortgage rate — what's the difference?
Prime is the bank benchmark for variable products. Your actual mortgage rate is prime minus a discount (variable) or a separate fixed rate tied to bond yields. See today's best mortgage rates.