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The criminal interest rate is the maximum annual percentage rate any lender in Canada — including private and alternative mortgage lenders — may legally charge, capped at 35% APR under the Criminal Code, effective January 1, 2025.
Effective January 1, 2025, amendments made through the 2023 and 2024 federal budget implementation acts — along with new Criminal Interest Rate Regulations — lowered the cap from the equivalent of roughly 48% APR (a 60% effective annual rate under the old rule) to 35% APR. The new rules also broadened the offence to cover advertising or offering credit at a criminal rate, not just entering into or receiving it.
For mortgage brokers, this matters most on the private and alternative-lending side of the business, where rates and fees are highest: the “cost of borrowing” used to test against the cap includes many of the fees layered onto a private or MIC-funded loan, not just the stated interest rate. A narrow exemption exists for certain commercial loans between $10,000 and $500,000 to non-natural-person borrowers, capped at 48% APR — but that exemption does not apply to ordinary consumer mortgage lending.
35% APR since January 1, 2025: the Criminal Code cap dropped from the equivalent of about 48% APR to 35% APR, under amendments enacted through the 2023 and 2024 federal budget implementation acts.
Applies to all lenders, including private and MIC lenders: the cap is not limited to banks — private lenders and Mortgage Investment Corporations arranging second mortgages must also stay under it.
Fees count toward the cap: the “cost of borrowing” used to test against the criminal rate can include certain fees layered onto the loan, not just the stated interest rate alone.
Narrow commercial exemption: loans between $10,000 and $500,000 to non-natural-person (business) borrowers are exempt up to 48% APR — an exemption that does not apply to ordinary consumer mortgage financing.
A private lender proposes a consumer loan at 40% APR, including fees:
40% is above the 35% APR criminal interest rate cap, so this rate cannot lawfully be charged, offered, or advertised to this borrower.
Definitions reflect Canadian federal and provincial rules as of the “Updated” date above. Not advice for any specific file.
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