The prime rate is the base rate Canadian banks use to price variable-rate borrowing: variable mortgages, home equity lines of credit and lines of credit. This page covers what it is, how it follows the Bank of Canada policy rate, and its history. For the other rate guides, see Canadian mortgage rates.
What is the prime rate?
The Bank of Canada’s definition: “Each financial institution sets its own prime rate, as a function of its cost of funding, which, in turn, is influenced by the target for the overnight rate set by the Bank of Canada.”
| Rate | Value | As of |
|---|---|---|
| Prime rate (Bank of Canada published figure) | 4.45% | September 30, 2026 |
| Bank of Canada policy rate (target for the overnight rate) | 2.25% | October 1, 2026 |
| Difference | 2.20 percentage points |
Sources: Bank of Canada, chartered-bank prime rate (series V80691311) and target for the overnight rate (V39079).
The prime rate in that table is a single published figure, but each bank has its own. The Bank of Canada explains how it picks the one it publishes: “All rates presented in this table are the most typical of those offered by the six major chartered banks.” and “The methodology for calculating the typical rate is based on the statistical mode of the rates posted by the six largest banks”. Lenders’ own HELOC terms name their own prime: TD’s FlexLine uses “a variable interest rate based on TD Prime Rate”, and Tangerine’s home equity line is priced at “the Tangerine Prime Rate plus or minus an adjustment factor” (as of October 1, 2026). Your agreement says which prime rate applies.
How prime follows the Bank of Canada
The Financial Consumer Agency of Canada puts it this way: “Your lender’s prime rate may change when the Bank of Canada changes its policy interest rate.” The policy rate itself, and how the Bank sets it, is covered in the Bank of Canada policy rate guide.
The gap between the two is a market practice, not a rule, and it has changed:
- April 2009: with the policy rate at 0.25%, the published prime rate was 2.25%, a gap of 2.00 points.
- 2015: the Bank of Canada cut its rate twice by 0.25 points, in January and July. The published prime rate fell by only 0.15 points each time: from 3.00% to 2.85% (week of January 28, 2015) and then to 2.70% (week of July 22, 2015). The gap widened to 2.20 points.
- Today: the gap is 2.20 points.
Between those 2015 cuts and today, every change in the Bank of Canada’s weekly prime series has matched a policy-rate change of the same size. The published prime rate has been 4.45% since the week of November 5, 2025, after the Bank of Canada’s policy-rate decision of October 2025.
Prime rate history in Canada
Year-end values of the Bank of Canada’s published prime rate (the last weekly value of each year; the latest year shows the value for the week of September 30, 2026):
| Year | Prime rate (year-end) |
|---|---|
| 1975 | 9.75% |
| 1976 | 9.25% |
| 1977 | 8.25% |
| 1978 | 11.50% |
| 1979 | 15.00% |
| 1980 | 18.25% |
| 1981 | 17.25% |
| 1982 | 12.50% |
| 1983 | 11.00% |
| 1984 | 11.25% |
| 1985 | 10.00% |
| 1986 | 9.75% |
| 1987 | 9.75% |
| 1988 | 12.25% |
| 1989 | 13.50% |
| 1990 | 12.75% |
| 1991 | 8.00% |
| 1992 | 7.25% |
| 1993 | 5.50% |
| 1994 | 8.00% |
| 1995 | 7.50% |
| 1996 | 4.75% |
| 1997 | 6.00% |
| 1998 | 6.75% |
| 1999 | 6.50% |
| 2000 | 7.50% |
| 2001 | 4.00% |
| 2002 | 4.50% |
| 2003 | 4.50% |
| 2004 | 4.25% |
| 2005 | 5.00% |
| 2006 | 6.00% |
| 2007 | 6.00% |
| 2008 | 3.50% |
| 2009 | 2.25% |
| 2010 | 3.00% |
| 2011 | 3.00% |
| 2012 | 3.00% |
| 2013 | 3.00% |
| 2014 | 3.00% |
| 2015 | 2.70% |
| 2016 | 2.70% |
| 2017 | 3.20% |
| 2018 | 3.95% |
| 2019 | 3.95% |
| 2020 | 2.45% |
| 2021 | 2.45% |
| 2022 | 6.45% |
| 2023 | 7.20% |
| 2024 | 5.45% |
| 2025 | 4.45% |
| 2026 | 4.45% |
Source: Bank of Canada Valet API, series V80691311.
Within the weekly data:
- Highest: 22.75%, from August 1981 to September 1981.
- Lowest: 2.25%, from April 2009 to May 2010.
- Pandemic low: 2.45%, from April 2020 to March 2022.
- Most recent peak: 7.20%, from July 2023 to June 2024.
For posted fixed mortgage rates and the average rates on mortgages chartered banks funded over the same years, see mortgage rate history.
How the prime rate reaches what you pay
Variable mortgages
A variable mortgage rate is set relative to the lender’s prime rate, so a change in prime passes straight through while the gap in your contract stays fixed. How lenders quote that gap and how to compare offers is covered in the guide to variable mortgage rates. The Bank of Canada’s data on the mortgages chartered banks funded, which include renewals and refinancing as well as new loans, shows where variable rates sit against prime: in July 2026, uninsured variable-rate mortgages averaged 3.86% and insured ones 3.75%, while the published prime rate was 4.45%.
A mortgage at prime minus 0.50 would be at 3.95% at today’s published prime rate. If prime rose by 0.25 points, the rate would rise to 4.20%; on a $500,000 balance, 0.25 points is about $1,250 a year in interest. If your variable mortgage has fixed payments, a rise in prime can bring you closer to your trigger rate.
HELOCs and lines of credit
The Financial Consumer Agency of Canada: “If your HELOC has a variable rate, it’s typically based on your lender’s prime rate.” The margin above prime depends on the lender and the borrower; the HELOC calculator shows the cost at a rate you choose, and line of credit rates compares unsecured lines.
Related pages
Sources
The figures and rules on this page come from these sources, last checked against them between October 1, 2026 and October 2, 2026. How we check facts.
- Bank of Canada: Interest rates posted for selected products by the major chartered banks
- Bank of Canada: Data table
- Bank of Canada: Data table
- Bank of Canada: Data table
- Bank of Canada: Mortgage rates, fixed 5 years and over: uninsured residential mortgages, funds advanced (data series)
- Bank of Canada: Data table
- Bank of Canada: Data table
- Financial Consumer Agency of Canada: Home equity lines of credit
- Tangerine: Home Equity Line of Credit | Tangerine
- TD: TD Home Equity FlexLine (HELOC) – TD Canada Trust