Prime Rate

Learn what the prime rate is in Canadian real estate, how it influences mortgage rates, and what it means for borrowers with variable-rate loans.

Prime Rate



What is the Prime Rate?

The prime rate is the benchmark interest rate set by major Canadian banks, used as the basis for determining variable interest rates on loans and lines of credit.

Why the Prime Rate Matters in Real Estate

In Canadian real estate, the prime rate directly affects borrowing costs for variable rate mortgages, Home Equity Lines of Credit (HELOCs), and personal loans. It is influenced by the Bank of Canada’s overnight lending rate and typically adjusts several times a year in response to monetary policy.

Key features of the prime rate:
  • Published by major financial institutions (e.g., RBC, TD)
  • Used to price variable loans (e.g., Prime - 0.5%)
  • Responds to economic conditions like inflation or growth


Borrowers with variable-rate mortgages or floating-rate HELOCs will see their interest rates fluctuate as the prime rate changes. Conversely, fixed-rate mortgages are not directly tied to the prime rate but may still be influenced by related bond yields.


Understanding the prime rate helps buyers assess interest risk, choose between fixed or variable products, and anticipate changes in monthly payments over time.

Example of the Prime Rate in Action

A borrower with a variable-rate mortgage at Prime - 0.75% sees their rate increase from 4.70% to 5.20% after the prime rate rises by 0.5%.

Key Takeaways

  • Base rate for variable loans in Canada.
  • Adjusted by banks based on Bank of Canada policy.
  • Affects mortgages, HELOCs, and credit lines.
  • Impacts affordability and payment amounts.
  • Important for borrowers with variable products.

Related Terms

Additional Terms

Benchmark Interest Rate

A benchmark interest rate is a reference rate used by lenders to determine mortgage qualification and pricing. In Canada, the Bank of Canada’s policy. more

Air Rights Development

Air rights development is the sale, lease, or use of the space above a property for construction or expansion. Common in urban centres, it allows new. more

Affordable Housing Agreement

An affordable housing agreement is a contractual arrangement between a developer and a municipality requiring a portion of new housing units to be. more

Adaptive Housing Design

Adaptive housing design refers to homes that are built or modified to accommodate people of all ages and abilities, including seniors and those with. more

Recourse Loan

A recourse loan is a type of loan where the lender can pursue the borrower’s personal assets, beyond the collateral, in the event of default.. more

Pari Passu

A pari passu clause is a contractual provision ensuring that multiple creditors share equally in repayment priority from the borrower’s assets.. more

More For You

BC Real Estate And Development Industry Hires And Promotions: September 2025
Clockwise from top left: Erin Elliott, Kaitlynn Given, Darren Tangen, Richard Hylands, James Blair, and Jenny Siman.

Fall is now in swing, and with the new season, some in real and estate and development across BC are settling into new roles. In fact, September brought a host of new hirings and promotions, including some high-level executive moves, such as Darren Tangen starting as the President of Westbank and Erin Elliott joining Conwest Developments as Chief Financial Officer.

The month also brought moves in government, across brokerages, and in finance.

Keep ReadingShow less
When The Luxury Market Is Cool (And The Neighbours Aren’t), Your Agent Makes All the Difference

REMAX

In luxury real estate, it’s easy to assume that prestige sells itself. But even the most sought-after properties aren’t immune to the unpredictable. Market conditions cool. Stock portfolios dip. A next-door lawn grows wild. And just like that, a multimillion-dollar listing becomes harder to move.

This is why working with a highly experienced luxury REMAX® agent — one who understands how to navigate nuance, set a strategic tone, and overcome hurdles outside a seller’s control — is invaluable.

Keep ReadingShow less
Is It Time To 'Buy The Dip' On Investment Condos?
Shutterstock

This article was written and submitted by Cameron Levitt, a Toronto-based real estate agent with RE/MAX Hallmark who writes about housing dynamics, market trends, and the Canadian economy.

A recent CMHC report titled "Is Toronto's condo market downturn a repeat of the 1990s?" points to a possible future rebound as new supply has essentially stopped. The argument is straightforward: With no new projects breaking ground today, the eventual shortage could drive another wave of appreciation tomorrow. That thesis is the foundation for many to ask and question whether or not it's time to buy investment condos.

Keep ReadingShow less
Ontario Real Estate And Development Industry Hires And Promotions: September 2025
Clockwise from top left: Eric Plesman, Eric Lombardi, Kiran Marok, Jacob Cohen, Ana Bailão, and Ariel Rososhansky

Like our ever-changing cities and towns, Ontario's real estate and development landscape (and the people who make it run) are also ever-changing. From new hires and retirements to promotions and partnerships, here are all the notable moves you should know about from September.

Notable moves from last month include Ana Bailão being appointed inaugural CEO of Build Canada Homes, Jacob Cohen being promoted to President of The Daniels Corporation, Eric Lombardi joining Build Toronto as Chair, and Eric Plesman rejoining Oxford Properties Group as President and CEO.

Keep ReadingShow less
Op-Ed: Building The Future On A Foundation Of Truth
Releasing the Truth and Reconciliation Guide at an event at Northcrest Development’s YZD Experience Centre. From left to right: Warren Sault, president and CEO of Mississaugas of the Credit Business Corporation; Carolyn King, Shared Path board chair and former chief of the Mississaugas of the Credit First Nation; Richard Joy, ULI Toronto’s executive director; Bob Goulais, president & senior principal at Nbisiing Consulting Inc/Garcia Creative

This piece was written and submitted by Carolyn King, President & Board Chair of the Shared Path Consultation Initiative, and Richard Joy, Executive Director of ULI Toronto.

The places we design, build, and live within are more than bricks and mortar — they are expressions of our values. For too long in Canada, our communities and their built environment have been shaped without fully recognizing and meaningfully engaging the rights, histories, and voices of Indigenous Peoples. That must change.

Keep ReadingShow less
Stefany Marin, Century 21 Signature Service

Welcome to Meet the Agent, an ongoing series profiling real estate agents from across Canada. With more than 150,000 agents, brokers, and salespeople working in 75 different boards and associations across the country, we thought it was about time they had a place to properly introduce themselves.

If you or someone you know deserves the same chance, email agents@storeys.com to apply.

Keep ReadingShow less
How Innovation Districts Keep Universities Resilient Amid Funding Woes
Rendering from York University's 'Keele Campus Vision and Strategy'/yorku.ca

Ontario universities have long faced funding challenges, and public underfunding and domestic tuition freezes tend to lead to a reliance on pricier international student tuitions. But as international student numbers dwindle due to the implementation of lower immigration targets, universities must find innovative ways to boost revenue — while continuing to deliver world-class services to their students and communities.

One asset institutions are increasingly using to provide an avenue for long-term resilience and revenue is land. More specifically, developing institutionally owned lands in a transit-oriented, mixed-use fashion that promotes investment from a diverse array of industries. Enter: innovation districts.

Keep ReadingShow less
The Backyard, Elevated: How Geothermal Unlocks Design Flexibility And Long-Term Value

Rendering of the Saw Whet condo in Oakville/courtesy of Caivan communities

Condo developers are responding to a challenging market with innovative projects that prioritize end-user experience and long-term value. Increasingly, buyers want homes that emphasize wellness, outdoor access, and new lifestyle amenities — and forward-looking developers are leading that shift.

Geothermal heating and cooling systems are emerging as a strategic tool in that process — delivering expected sustainability benefits while unlocking a range of new opportunities for design innovation and livability.

Keep ReadingShow less