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Prime rate is the benchmark lending rate each Canadian bank sets, moving largely in step with the Bank of Canada’s policy rate; it’s the reference point lenders use to price variable-rate mortgages and HELOCs, typically quoted as “prime minus” or “prime plus” a spread.
Each Canadian bank publishes and sets its own prime rate; it isn’t set by government decree, but in practice the major lenders’ prime rates tend to move together and closely track changes in the Bank of Canada’s policy rate.
Variable mortgages and HELOCs are priced as prime plus or minus a fixed spread (for example, “prime minus 0.5%”), so whenever a lender adjusts its prime rate, the interest cost on every prime-linked product it holds shifts with it — which is also what can push a static-payment variable mortgage toward its trigger rate.
Set by each bank: prime rate is published independently by each Canadian financial institution, not mandated directly by the Bank of Canada.
Drives variable pricing: variable-rate mortgages and HELOCs are quoted as a spread to prime, so a prime-rate change immediately changes the cost of those products.
Trigger-rate risk: movements in prime are what can push a fixed-payment variable mortgage toward or past its trigger rate.
Where to verify it: the Bank of Canada publishes the interest rate data that underpins prime-rate movements — always confirm current figures at the source rather than relying on a cited number.
Definitions reflect Canadian federal and provincial rules as of the “Updated” date above. Not advice for any specific file.
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