Bank of Canada Raises Policy Rate to 2.50%
Current Prime Rate
4.70%
November 3, 2026 – The prime interest rate in Canada is currently 4.70%.
Today’s Prime Rate in Canada
The prime rate in Canada today is 4.70%, a key benchmark for borrowing costs nationwide. The Canadian prime rate influences everything from variable mortgage rates to personal loans and lines of credit. The prime rate is a floating rate, so it moves in step with the Bank of Canada’s target for the overnight policy rate, which the Bank uses to manage inflation and economic growth.
Understanding how the prime rate works empowers you to make better decisions, whether you’re choosing between fixed and variable mortgages, planning a refinance, or simply monitoring your monthly budget as your cost of borrowing evolves.
- The Bank of Canada raised its policy rate to 2.50% on October 28, 2026, and the big banks raised their prime rate from 4.45% to 4.70%, effective October 29, 2026.
- The prime rate adjusts shortly after each Bank of Canada policy rate decision.
- Changes in the prime rate directly affect variable-rate mortgages, HELOCs, and credit lines.
- Prime fell from its 7.20% peak in July 2023 as inflation eased, but energy prices have kept inflation around 3% since April 2026 and prompted the Bank’s first increase since July 2023.
- On October 28, 2026, the Bank ended a seven-hold run by raising rates by 25 basis points. It said there “could be a need to increase the policy rate further,” and its next decision is on December 9, 2026.
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Mortgage Industry Insights: November 2026
On October 28, the Bank of Canada raised its target for the overnight rate by 25 basis points to 2.50%, its first increase since July 2023 after seven consecutive holds. The big banks raised prime by the same amount, to 4.70%, effective October 29. The Bank said growth picked up through the middle of the year, with GDP up 3.3% in the second quarter and about 2% in the third. Statistics Canada’s October 30 data came in softer: real GDP was essentially unchanged in August, and industry figures point to 0.3% third-quarter growth, about 1.3% annualised. The unemployment rate has been around 6.5% for several months. CPI inflation was 3.1% in September; excluding gasoline, it was 2.2%, and core inflation remains close to 2%. The Bank now expects inflation to rise to about 3.5% by the end of the year, average 3% in 2027 and fall to 2% by mid-2028. Governor Tiff Macklem explained the decision:
In September, the Bank held while weighing two risks pulling in opposite directions. This time it acted on the first: energy prices expected to stay higher for longer and building cost pressures. It left the door open to more: “There could be a need to increase the policy rate further, but given uncertainties, Governing Council agreed to proceed carefully.” History points the same way: no Bank of Canada tightening cycle since 1997 has ended after a single increase. Bond markets put the odds of a 25-basis-point hike on December 9 at 43%, against 57% for a hold, and imply 99% for a hike by January 27. Read the full Opening Statement, the October Monetary Policy Report and our post-announcement mortgage strategy breakdown to understand what this means for Canada’s mortgage rate forecast.
Prime Rate vs Bank of Canada Overnight Rate
What Is the Bank of Canada’s Overnight Rate?
The overnight rate, also known as the policy rate, is the interest rate at which chartered banks lend money to each other overnight. Canada’s central bank, the Bank of Canada, uses the overnight rate to guide monetary policy, raising it to cool inflation or lowering it to stimulate the Canadian economy.
Why Do Banks Adjust Prime Rates?
When the Bank of Canada changes the overnight rate, banks almost always adjust their prime rates within a few days. Although each lender technically sets their prime rate, competitive pressure keeps them aligned. Historically, the prime rate has been about 2.20% higher than the overnight rate.
As of November 2026:
- Bank of Canada Overnight Rate: 2.50%
- Prime Rate: 4.70%
How the Prime Rate Affects Your Mortgage
The prime rate underpins all floating-rate borrowing, including variable and adjustable mortgages, HELOCs, credit lines and revolving loans. It serves as the starting point lenders use to price a wide range of personal and business credit products and plays a central role in determining how affordable borrowing becomes as economic conditions shift.
Before exploring how variable and adjustable mortgages work, it helps to understand why the prime rate matters so much. When it changes, it quickly ripples through nearly every type of variable lending in Canada, affecting both new applications and existing balances.
Variable-Rate Mortgages and HELOCs
Variable mortgage rates are typically advertised as prime plus or minus a percentage (representing the discount or premium). Home equity lines of credit (HELOC) are advertised similarly. For example:
- Prime + 0.50% = 5.20% as the effective HELOC rate, since prime is currently at 4.70%
VRM vs ARM Explained
As prime fluctuates, your borrowing costs rise or fall. Changes to your lender’s prime rate will affect your monthly payment with an ARM and your amortization with a VRM. Prime rate changes impact your monthly payment (in adjustable-rate mortgages) and the allocation of each monthly payment between principal and interest (in variable-rate mortgages).
- Variable-Rate Mortgage (VRM): Your monthly payment stays the same even as the prime rate changes, but a larger or smaller portion goes toward interest, which directly affects your remaining amortization.
- Adjustable-Rate Mortgage (ARM): Your monthly payment adjusts automatically as the prime rate rises or falls, while your mortgage principal remains unaffected, preventing negative amortization.
What to Consider Between Fixed vs Variable
Fixed mortgage rates are primarily driven by the Government of Canada bond yields, not the prime rate. However, if the Bank of Canada signals a long period of lower rates, bond yields often fall, indirectly reducing fixed rates.
When rates are high but expected to fall, variable products can save you money. If stability is a top priority, locking into a fixed rate can help avoid payment shocks and provide predictable budgeting and cash flow.
*Most Recent Prime Rate Shown
Source: BankofCanada.ca
Prime Rate Forecast for Canada
The Bank of Canada raised rates by 25 basis points to 2.50% on October 28, its first increase since July 2023, amid:
- High energy prices and refinery margins that lifted headline inflation to 3.1% in September, with energy inflation at 19%
- US tariffs of 50% on a range of Canadian goods after trade talks broke down in late August, and Canadian counter-tariffs
- An economy the Bank describes as showing resilience, with second-quarter growth of 3.3% (annualized)
Bond market pricing suggests a 43% chance of a 25-basis-point hike by the next Bank of Canada meeting on December 9. The Bank kept another increase on the table: “There could be a need to increase the policy rate further, but given uncertainties, Governing Council agreed to proceed carefully.” Its October Monetary Policy Report expects inflation to reach about 3.50% by the end of 2026 and return to 2% by mid-2028. The path from here depends on how inflation and growth actually unfold. Recent updates to our mortgage rates forecast suggest fixed rates could firm modestly over the near term.
Prime Rate Trends and Historical Context
Over the last decade, Canada’s prime rate has fluctuated significantly, but historically, mortgage rates have been higher than today’s.
Here are recent highlights of changes in the prime rate:
| Year | Prime Rate Range |
|---|---|
| 2020 | 2.45% (pandemic lows) |
| 2022 | 2.70% – 6.45% |
| July 2023 | 7.20% (peak) |
| December 2024 | 5.45% |
| June 2025 | 4.95% |
| October 2025 to October 2026 | 4.45% |
| October 2026 | 4.70% (first increase since July 2023) |
Historical Highs:
- 1981: Prime reached 22.75% during a period of runaway inflation.
Recent Timeline:
- 2022–2023: Rapid rate hikes to tame inflation.
- 2024: Steady rate cuts as inflationary pressures moderated.
- 2025: Easing continued through October before the Bank paused, holding at 2.25%.
- 2026: Seven consecutive holds at 2.25% amid tariffs and energy-driven inflation, then a 25-basis-point increase on October 28, the first since July 2023.
Source: bankofcanada.ca
How Does the Prime Rate Impact Variable Mortgage Rates?
The Bank of Canada’s (BoC) target overnight rate directly influences the prime rates lenders set. When the policy rate changes, prime rates adjust accordingly. Most lenders calculate their prime rate as the BoC’s policy rate plus approximately 2.2%. This prime rate underpins lenders’ posted rates, which they advertise to borrowers.
Posted rates typically add (premium) or subtract (discount) a specific percentage from the prime rate. For example, a lender might offer a prime + 0.5% or prime – 0.5% rate, meaning you’ll pay the prime rate with a premium or discount.
Variable-rate mortgages, tied to the prime rate, can have fixed or adjustable payments.
- Adjustable-rate mortgages (ARM): Payments fluctuate as the prime rate changes. The monthly payment adjusts automatically; ARMs avoid negative amortization.
- Variable-rate mortgages (VRM): Payments remain unchanged even as the prime rate changes. However, if the prime rate rises, more of your monthly payment goes to interest and less to principal, which can lead to negative amortization, where your principal balance may not decrease as expected by the end of the term.
When the prime rate decreases, your variable mortgage rate follows, lowering your interest costs. In this case, more of your payment goes toward the principal, which can help you pay off your mortgage faster and reduce the remaining balance at the end of the term.
We're curious…
Frequently Asked Questions (FAQ) About the Prime Rate in Canada
What is Canada’s current prime rate?
As of Tuesday, November 3, 2026, Canada’s prime rate is 4.70%. The Bank of Canada raised its policy rate to 2.50% on October 28, 2026, and lenders’ prime moves up by the same 25 basis points as they pass on the increase.
What is the difference between the prime rate and the prime lending rate?
There is no difference. The prime rate and the prime lending rate are the same thing: the benchmark annual rate Canadian banks use to price loans for their most creditworthy borrowers. Both currently sit at 4.70% at the major banks.
Do all Canadian banks use the same prime rate?
Almost. RBC, TD, BMO, Scotiabank, CIBC and National Bank all post a prime rate of 4.70%, and they typically move within a day or two of a Bank of Canada decision. TD is the exception for mortgages, posting a separate mortgage prime rate that is 15 basis points higher than its standard prime.
How does the prime rate impact variable mortgage rates?
Your mortgage rate moves in lockstep with the prime rate. For example, if your mortgage is prime minus 0.50% and the prime increases by 0.25%, your effective rate rises by the same amount.
Does the prime rate affect fixed mortgage rates?
Fixed rates aren’t directly affected by the prime rate; they’re primarily tied to government bond yields, though expectations about future prime rate movements can influence bond markets well before the BoC adjusts policy.
What is the forecast for the prime rate in 2026?
The prime rate is moving up in 2026: the Bank of Canada held its policy rate at 2.25% through seven consecutive decisions, then raised it to 2.50% on October 28, its first increase since July 2023. All six big banks raised their prime rate from 4.45% to 4.70%, effective October 29. The Bank said it “could be a need to increase the policy rate further,” and its last 2026 decision is on December 9. Where prime goes next depends on how inflation and growth evolve.
How can I protect myself from increases in the prime rate?
Consider converting your variable or adjustable mortgage to a fixed mortgage, making extra payments when interest rates are low, or maintaining savings or a budget buffer to handle potential rate increases.
Final Thoughts
Canada’s prime rate is one of the most important benchmarks for borrowers. Whether you’re renewing, refinancing, or buying a home, understanding how the prime rate influences your mortgage and credit facilities can help you make better financial decisions.
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