Today's Prime Rate in Canada is 2.45%
What is Prime Lending Rate?
Any kind of loans you apply for carry interest rates depending on the prime rates. You may want to apply for a mortgage, personal lines of credit, car loan or credit card. The rates of interest you pay on these loans fluctuate according to the prevailing prime rate.
How is the prime rate set?
The Bank of Canada (BoC) affixes a key interest rate which is the target for the overnight rate, or “overnight rate” as it is also called. The overnight rate influences the prime rate that is the cost incurred by financial institutions to borrow money. Each time the BoC raises the overnight rate, banks incur a higher charge for borrowing money. To cover the additional expense, they also raise the prime rates they charge. The reverse is also true and lower prime rates depend on the BoC’s lower overnight rates.
Typically the Big Five Banks of Canada have a uniform prime rate. However, individual banks may charge their own prime rates. In the past times, there have been instances when banks have chosen not to lower their prime rates according to the lowered overnight rates of the BoC.
Scotiabank Prime Rate
Scotiabank's Prime rate is currently 2.45%.
BMO Bank of Montreal Prime Rate
BMO Bank of Montreal Prime rate is currently 2.45%.
TD Bank Prime Rate
TD Bank's Prime rate is currently 2.45%.
CIBC Prime Rate
CIBC Prime rate is currently 2.45%.
RBC Royal Bank Prime Rate
RBC Royal Bank's Prime rate is currently 2.45%.
HSBC Prime Rate
HSBC Prime rate is currently 2.45%.
How does the prime rate affect mortgage rates?
Most mortgage providers in Canada offer you two kinds of mortgages. Here’s what you need to know about them.
Fixed Interest Mortgages:The rate of interest payable on fixed interest mortgages remains the same all through the term of the mortgage regardless of the prevailing rates in the outside market. You should opt for this system if you suspect that there are likely to be major fluctuations in the interest rates in the market. Or, if you prefer the security of paying a fixed amount of interest all through the mortgage term.
Variable Interest Mortgages:The rate of interest payable on variable interest mortgages depends on the prime rate plus or minus a fixed percentage as outlined in the terms of your mortgage contract. If the prime rate goes up, you’ll pay more interest whereas if the prime rate goes down, you’ll pay a lower rate of interest. In this way, the interest rates vary by the same amount as the prime rate. Typically, the rates of interest on variable interest mortgages is lower than that on fixed interest mortgages. You’ll have to be prepared to pay high rates of interest according to the prevailing rates. However, you do have the option of switching from a variable interest mortgage to a fixed interest mortgage at any time. But, you’ll have to pay the current fixed rate of interest applicable at the time of conversion.