Canada’s Big Six banks have lowered their prime rates by 25 basis points, mirroring the Bank of Canada’s latest move. The benchmark prime rate now sits at 4.45%, with TD’s mortgage prime slightly higher at 4.60% due to a pricing change made years ago.
This is the lowest level since June 2022, before the central bank’s rapid series of hikes that pushed borrowing costs to a 22-year high. Since then, prime has fallen by a total of 255 basis points, marking one of the fastest easing cycles in recent memory.
For homeowners with adjustable-rate mortgages, the cut means immediate savings—about $14 less per month for every $100,000 borrowed on a 25-year amortization. Those with fixed-payment variable mortgages won’t see lower payments but will chip away at their principal faster. Borrowers with HELOCs and personal lines of credit will also benefit as rates drop in lockstep with prime.
While roughly a third of Canadian mortgages remain variable-rate, the majority are fixed-payment structures offered by lenders like RBC, TD, and CIBC. Adjustable-rate mortgages, more common with BMO and Scotiabank, react instantly to changes in prime.
Fixed-rate mortgages aren’t directly tied to prime but instead move with bond yields. Government of Canada bond yields have generally drifted lower this year, though the five-year yield recently ticked up after the Bank of Canada signaled its rate is “about the right level” to keep inflation in check.