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The Bank of Canada policy rate — also called the overnight rate — is the interest rate the central bank targets for overnight lending between financial institutions, set at scheduled announcement dates; it is the single biggest driver of variable mortgage pricing in Canada, and an indirect influence on fixed rates.
When the Bank of Canada changes the policy rate, lenders typically adjust their prime rate in response, which flows almost immediately into the cost of variable-rate mortgages and HELOCs priced off prime.
Fixed mortgage rates work differently: they track bond-market yields, which move based on where investors expect the policy rate to go — so fixed rates can shift before or after an actual Bank of Canada announcement, rather than moving in lockstep with it.
Announced on a fixed schedule: the Bank of Canada sets policy-rate decisions on pre-announced dates published in advance on its website.
Variable-rate transmission: policy-rate changes pass through to prime rate and then directly into variable mortgage and HELOC costs.
Fixed-rate influence: fixed rates respond to bond-yield expectations about the future policy path, not just to the latest announcement.
Authoritative source: always confirm the current policy rate directly at the Bank of Canada — it changes and should never be assumed from a cited figure.
Definitions reflect Canadian federal and provincial rules as of the “Updated” date above. Not advice for any specific file.
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