Today’s Mortgage Rates updated as of April 15, 2026 9:51 am
5-year fixed*
5-year Variable*
*Insured loans. Other conditions apply. Rate in effect as of today.
The prime rate is set by major lenders
It usually moves with the Bank of Canada’s policy rate
Variable-rate mortgages are tied to prime
Fixed rates are influenced differently
The prime rate in Canada is one of the most important interest rates for borrowers. It directly affects variable-rate mortgages, lines of credit, and many other lending products.
At Citadel Mortgages, we help Canadians understand what the prime rate is, how it works, and why changes to the prime rate matter when choosing a mortgage.
The prime rate is the base interest rate that major Canadian lenders use to price variable-rate loans.
Banks and lenders use the prime rate as a benchmark to set:
variable-rate mortgages
home equity lines of credit (HELOCs)
personal and business lines of credit
Each lender technically sets its own prime rate, but in practice, most major banks move together.
The prime rate is not directly set by the government.
However, it closely follows decisions made by the Bank of Canada, which sets the target overnight rate as part of its monetary policy.
When the Bank of Canada raises or lowers its policy rate, lenders typically adjust their prime rates shortly after.
Official rate information can be found here:
This distinction is critical for borrowers:
Bank of Canada Target Overnight Rate
Set by the central bank
Used to control inflation and economic conditions
Does not apply directly to consumer loans
Prime Rate
Set by lenders
Used to price variable consumer loans
Moves because of Bank of Canada decisions
Many borrowers confuse the two, but they are not the same thing.
Using a mortgage broker that has access to some of the lowest mortgage rates in Canada, is key to ensure you have the best approval rate.
Variable-rate mortgages are typically priced as:
Prime ± a lender discount or premium
When the prime rate changes:
interest costs change
monthly payments may change, or
amortization may adjust (depending on mortgage type)
Understanding how your mortgage responds to prime-rate changes is essential before choosing a variable rate.
Prime rate changes:
directly affect variable rates
do not directly change fixed rates
Fixed mortgage rates are influenced more by:
bond markets
investor expectations
long-term economic outlook
This is why fixed and variable rates can move in different directions at the same time.
The prime rate helps borrowers:
assess variable-rate risk
understand payment volatility
compare variable vs fixed options
It should not be used to:
predict exact future mortgage costs
attempt to time rate changes
delay decisions indefinitely
The Financial Consumer Agency of Canada encourages borrowers to focus on affordability and risk tolerance, not short-term rate movements:
“The prime rate matters most for borrowers choosing variable mortgages. The key isn’t guessing where prime will go — it’s choosing a mortgage structure that works if rates move in either direction.”
Getting approved for a mortgage requires a strategic approach, especially during periods of rising rates.
It depends on economic conditions. If inflation stabilizes, the Bank of Canada may reduce the overnight rate, prompting banks to lower their prime rates.
Most major banks align, but each lender technically sets its own.
The prime rate typically changes after the Bank of Canada announces its overnight rate adjustments, which occur eight times per year.
Fixed mortgages are indirectly influenced by the prime rate. Changes in the rate affect overall market conditions, which lenders use to set fixed rates.
A higher interest rate increases monthly payments, while lower rates reduce overall costs.
Fixed rates offer stability, while variable rates provide potential savings if market rates drop.
Yes, refinancing allows homeowners to take advantage of lower rates, depending on lender terms and fees.
Not always. They carry more risk.
Yes, depending on your mortgage structure.
Simplify your financial planning with our full calculator suite:
Whether rates rise or fall, Citadel Mortgages helps Canadians compare fixed and variable options with a clear understanding of how the prime rate affects their mortgage.