What is a Prime Rate?

Prime Rate is a rate that banks and other lenders will use for lending. Examples of a prime rate are seen in such mortgage products like variable rate mortgages, credit cards, secured and unsecured lines of credits or HELOCs (Home Equity Lines of Credit).

The Prime Interest Rate usually changes as the Bank of Canada’s overnight target rate changes. As a result, the Bank's Prime Rates changes in accordance with the central banks.

Most lenders in Canada use the same prime lending rate with an exception of TD Bank who uses their own Prime Rate.


A Prime Rate will usually affect variable rate mortgages and other variable rate products like lines of credit.

What is Prime Rate today?
Prime Rate is currently 3.95%.
TD Bank's Prime Rate is 4.10%

Why does Prime Rate keep changing?
​What influences it?
"Prime Rate" is influenced by the Bank of Canada's overnight lending rate. Lately, the Bank of Canada is concerned that inflation is on the rise and therefore, has set out to meet a target rate. As a result, we will see Prime Rate most likely continue to rise in line with the rise of inflation.

On the flip side, the Bank of Canada usually lowers the overnight lending rate, which subsequently reduces Prime Rate, when it's concerned that inflation is decreasing or is moving towards disinflation.

Where is Prime Rate Headed?

Most economists as well as the Bank of Canada itself has indicated that it would like to meet a target rate of around 4.5% to 6% by 2021. Therefore, we can expect the overnight lending rate and subsequently the Prime Rate to continue to rise.