The prime rate (about 4.45% in 2026) drives variable products and tracks the Bank of Canada overnight rate of 2.25%. A fixed mortgage rate is locked for your term and follows government bond yields instead. Check the current prime on our prime rate page.
Prime rate is the benchmark for variable mortgages and HELOCs; it tracks the Bank of Canada overnight rate (2.25%) and is about 4.45% in 2026. Fixed mortgage rates are set for your term and follow Government of Canada bond yields. Because they respond to different forces, they can move apart — even in opposite directions. Which one matters depends on the product you hold. This is not financial advice.
The prime rate is the interest rate Canadian banks use as a base for pricing variable-rate loans — including variable mortgages and HELOCs. It moves in lockstep with the Bank of Canada's overnight rate. In 2026 the overnight rate is 2.25%, and prime is typically the overnight rate plus about 2.20%, giving a prime of roughly 4.45%. When the Bank raises or lowers the overnight rate, banks adjust prime within a day or two, so anyone on a variable product feels the change almost immediately.
Fixed rates are a different animal. Lenders fund fixed mortgages in the bond market, so fixed mortgage rates track Government of Canada bond yields — particularly the five-year yield for a five-year fixed. Bond yields reflect what investors expect for future inflation and economic growth, and they trade every business day. That means a fixed rate can drift up or down even during a stretch when the Bank of Canada leaves the overnight rate — and therefore prime — completely unchanged.
Because prime responds to today's policy rate while fixed rates respond to tomorrow's expectations, the two can diverge. Suppose inflation surprises to the upside: bond yields may jump, pushing fixed rates higher, while the Bank of Canada holds prime steady to assess the data. Conversely, if markets grow confident a cut is coming, bond yields can slide and fixed rates ease before prime moves at all. Watching both the rate history and the inflation rate helps you read where each is heading.
| Feature | Prime rate | Fixed rate |
|---|---|---|
| Benchmark | Overnight rate (2.25%) | Bond yields |
| Applies to | Variable mortgage, HELOC | Fixed mortgage |
| Changes | After each BoC decision | Daily with bond market |
| Current level (2026) | ~4.45% | Varies by term |
It comes down to your product. If you hold a variable mortgage or a HELOC, prime is your rate driver and your cost shifts after each policy decision — the next is July 15, 2026. If you hold a fixed mortgage, your rate is locked and neither prime nor bond yields touch your payment until renewal. When you shop, remember every mortgage must clear the stress test — the higher of your contract rate plus 2% or 5.25%. Model both a fixed and a variable scenario with our mortgage calculators before you commit.
The prime rate is the benchmark banks use to price variable products like variable mortgages and HELOCs. It tracks the Bank of Canada's overnight rate and sits at about 4.45% in 2026. A fixed mortgage rate is locked for your term and is priced off government bond yields, not prime, so the two can move independently.
Prime tracks the Bank of Canada's overnight rate, which is 2.25% in 2026. Prime is typically the overnight rate plus about 2.20%, giving roughly 4.45%. When the Bank raises or cuts, banks move prime within days.
Fixed mortgage rates track Government of Canada bond yields, especially the five-year yield. Bond yields reflect the market's expectations for future inflation and growth, so fixed rates can rise or fall even when the Bank of Canada holds its overnight rate steady.
Yes. Because prime follows the overnight rate and fixed rates follow bond yields, they can diverge. Bond yields may climb on inflation fears and push fixed rates up while the Bank of Canada holds prime flat, or bond yields may fall ahead of an expected cut before prime actually moves.
If you have a variable-rate mortgage or a HELOC, prime affects you and your cost changes after each Bank of Canada decision. If you have a fixed-rate mortgage, your rate is locked for the term and neither prime nor bond yields change your payment until renewal.