The prime rate in Canada is 4.7%, as set by the Bank of Canada.
The prime rate is based on the overnight rate (also called the policy rate) set by the Bank of Canada. It was lowered to 2.5% on September 17, 2025. The prime rate fluctuates as it adjusts to combat inflation, and this affects a long list of financial products and services, from mortgage rates to savings accounts.
We've created this guide to help you understand the ups and downs of the prime rate and how it affects everyday Canadians.
Key Takeaways
- The prime rate in Canada is currently 4.7%.
- Prime rate fluctuations affect many areas of personal finance, including mortgages, lines of credit, savings accounts, and loans.
- The prime rate is tied to the Bank of Canada overnight rate, which currently stands at 2.5%. This rate is raised to combat inflation and lowered to combat recession.
- Most experts believe that the prime rate will continue to go down as 2025 progresses.
What's the prime rate in Canada?
The prime rate in Canada is the mean average of the prime rate at each of the big banks. The Bank of Canada's overnight rate (also known as policy interest rate) fell to 2.5% on September 17, 2025, and most of the major Canadian banks are at a prime rate of 4.7%, which means the official prime rate is 4.7% right now.
Prime rate quick facts
- Each bank in Canada sets its prime rate based on the Bank of Canada's overnight rate, which determines how expensive it is for banks to borrow money.
- All 6 of the major Canadian banks (BMO, TD, RBC, CIBC, Scotiabank, and National Bank) typically have the same prime rate, although this doesn't have to be the case.
Oct 28, 2025 market update
Here are a few updates on real estate, housing, and CPI in Canada:
October 2025 housing market update
While the majority of Canada is looking best for sellers, Ontario is the only province currently experiencing a buyer’s market.
- Lower house prices: The average sold price for May 2025 was $691,299 – a 1.8% decrease from the average price of $703,732 at this time last year.
- More new listings: The total number of new homes listed in May 2025 went up 3.1% from April 2025.
- Higher National sales: The number of homes sold across the country in May 2025 went up 3.6% from April 2025.
Sales activity continued to flounder towards the end of May. This was likely due to ongoing uncertain trade relations with the U.S. and caution surrounding unpredictable tariffs.
2025 Housing market forecast
The overnight rate cut on September 17 from 2.75% to 2.5% has made it cheaper for Canadians to borrow money. This would normally cause increased home-buying activity as we progress through 2025, but the uncertain U.S. tariff situation has mostly kept people from pulling the trigger on large financial decisions.
While foreign trade issues and changes in immigration are predicted to result in a modest economy in 2025, the CHMC predicts that housing sales will continue to rise. Lower mortgage rates and changes to mortgage rules are a big part of this, though sales are currently stagnating.
The CMHC also predicts that vacancy rates for rental units will increase as the year progresses, which means positive changes in affordability.
CPI update
Canada's Consumer Price Index (CPI) currently sits at 163.5 points. It rose by 1.7% in May compared to the CPI in May of 2024. Canada’s CPI gauges the average change in prices for a range of goods and services purchased by consumers, showing the rate of inflation.
These are some of the annual trends currently affecting CPI:
- Gas prices continue to fall
- Travel and electricity prices continue to fall
- Shelter costs are slowly rising
- Prices for durable goods are slightly falling
- Grocery prices are still rising
Prime rate history in Canada 2001 – 2025
Today, the prime rate in Canada for all major Canadian banks is 4.7% based on the Bank of Canada's target overnight rate (Policy Interest Rate) of 2.5%.
Below is a look at how the rates have changed since 2001:
| Date | Rate | Date | Rate |
|---|---|---|---|
| Jan 2001 | 7.25% | Oct 22, 2008 | 4% |
| Feb 2001 | 7.25% | Dec 2008 | 3.5% |
| Mar 2001 | 6.75% | Jan 2009 | 3% |
| Apr 2001 | 6.5% | Mar 2009 | 2.5% |
| May 2001 | 6.25% | Apr 2009 | 2.25% |
| Jul 2001 | 6% | Jun 2009 | 2.5% |
| Aug 2001 | 5.75% | Jul 2009 | 2.75% |
| Sep 2001 | 5.25% | Sep 2009 | 3% |
| Oct 2001 | 4.5% | Jan 2015 | 2.85% |
| Nov 2001 | 4% | Jul 2015 | 2.7% |
| Jan 2002 | 3.75% | Jul 2017 | 2.95% |
| Apr 2002 | 4% | Sep 2017 | 3.2% |
| Mar 2003 | 4.75% | Jan 2018 | 3.45% |
| Apr 2003 | 5% | July 2018 | 3.7% |
| Jul 2003 | 4.75% | Jan 2019 | 3.95% |
| Sep 2003 | 4.5% | Mar 5, 2020 | 3.45% |
| Jan 2004 | 4.25% | Mar 17, 2020 | 2.95% |
| Mar 2004 | 4% | Mar 30, 2020 | 2.45% |
| Apr 2004 | 3.75% | Mar 2022 | 2.7% |
| Sep 2004 | 4% | Apr 2022 | 3.20% |
| Oct 2004 | 4.25% | Jun 2022 | 3.7% |
| Sep 2005 | 4.5% | Jul 2022 | 4.7% |
| Oct 2005 | 4.75% | Sep 2022 | 5.45% |
| Dec 2005 | 5% | Oct 2022 | 5.95% |
| Jan 2006 | 5.25% | Dec 2022 | 6.45% |
| Mar 2006 | 5.5% | Jan 2023 | 6.7% |
| Apr 2006 | 5.75% | Jun 2023 | 6.95% |
| May 2006 | 6% | Jul 2023 | 7.20% |
| Jul 2007 | 6.25% | Jun 2024 | 6.95% |
| Dec 2007 | 6% | Jul 2024 | 6.7% |
| Jan 2008 | 5.75% | Oct 2024 | 5.95% |
| Mar 2008 | 5.25% | Dec 2024 | 5.45% |
| Apr 2008 | 4.75% | Jan 2025 | 5.20% |
| Oct 2008 | 4.5% | Feb 2025 | 5.20% |
| Oct 14, 2008 | 4.35% | Mar 2025 | 4.95% |
What makes the prime rate in Canada change?
The Bank of Canada rate is tied directly to the rates you receive from banks. That gives it a certain power over the economy – it allows the central bank to encourage Canadians to save or encourages them to spend.
When the prime rate is hiked up: borrowing money for things like mortgages and loans gets more expensive but your savings (like savings accounts and GICs) are suddenly giving you more interest. This encourages you to save money instead of spending and borrowing.
When the prime rate is lowered: suddenly, borrowing money against a home or big project becomes a lot cheaper. This encourages you to put more of your money into the economy by spending it.
How the prime rate affects interest rates
Canada's prime rate impacts you by changing the interest rate on the financial products you're offered or, in the case of variable rate products, you currently own.
Here's an overview of how you may be impacted by these changes.
| Type of product | Example products | When the prime rate goes up… | When the prime rate goes down… |
|---|---|---|---|
| Credit | * Mortgage * Line of credit * Personal loan * HELOC * Car loan |
* Borrowing money is more expensive * Variable rate products raise, causing more interest to be accrued * Fixed products will become more expensive to open, though any existing products will remain the same |
* Borrowing money is cheaper * Variable rate products will accrue less interest * Fixed rate products will be cheaper to open, but any existing products will remain the same |
| Investments | * Savings account * GIC |
* Interest paid will increase, earning you more money * New fixed rate GICs will have higher payouts, though any current fixed products will stay the same * Savings account rates are variable, so they’ll automatically increase on your accounts |
* Interest paid will decrease, so you won’t earn much money by using a savings account or GIC * New fixed rate GICs will have lower payouts, but existing products will stay the same |
So in the case of a prime rate increase, any credit product you take out will be more expensive, including any past products that have a variable rate. On the flip side, anything you earn interest on, like savings accounts and GICs, will usually give you more. This means you’ll be paying more to borrow and earning a bit more interest on your savings.
Is the interest rate going up?
It's unlikely that the prime rate will go up in 2025, so interest rates on your financial products won't likely go up either.
The annual inflation rate is down to 1.73%, from 1.74% in March. Still, most components of CPI are below their historical averages.
The Bank of Canada expects that the effects of the recent GST/HST holiday on certain goods and services will cause inflation to become volatile through March. But it's still expected to remain near the 2% target for the foreseeable future.
When will the next prime rate change be?
The next Bank of Canada meeting is scheduled for September 17, 2025, although an overnight rate change isn't guaranteed. If the economy stabilizes, they may keep the prime rate the same.
If it does change, some Canadian banks may shift the prime rate in tandem.
The BOC can also announce changes outside of these scheduled meeting dates, though that usually only happens in emergency situations (like the COVID-19 pandemic).
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What's the current prime rate in Canada?
The Canada prime rate is 4.7%, which has been in place since the day after BOC lowered the interest rate on December 11, 2024. The next scheduled prime rate update is on September 17, 2025, but a change isn't guaranteed.
What will Canada's prime rate be in 2025?
The Bank of Canada's prime rate is predicted to go down significantly in 2025, and is currently holding low at 2.5%. This means that interest rates for mortgages, savings accounts, and other financial products should also decrease.
What's the mortgage prime rate in Canada?
Right now, the Bank of Canada lists the 5-year conventional mortgage rate at 6.09%, 3-year at 6.05%, and 1-year at 6.09%. These are fairly consistent with most bank rates, but Tangerine often has lower rates.
How does the current prime rate in Canada affect me?
The Canada prime rate is what banks use to determine the rates for their products, including mortgages and savings accounts. High rates make it expensive to borrow and better to save, but lower rates make it cheaper to borrow.
What are experts saying about the Canada prime rate forecast?
Inflation has cooled significantly in early 2025. Plus, wages are declining, and Canadians are spending less on retail purchases. Based on these and other factors, experts believe the prime rate will continue to decrease through 2025.
When was the last prime rate change?
The Bank of Canada decreased the overnight rate to 2.5% on September 17, 2025. The last BOC meeting didn’t result in a rate decrease, and experts are having difficulty forecasting if/how it will change next time.
When does the prime rate change next?
The next Bank of Canada meeting is on October 29, 2025 – but just because they meet, doesn't mean their target rate will change. It may stay the same or even go down, but it's unlikely it will go up.
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