The prime rate is the interest rate set by the large financial institutions. It’s a varying number which is also known as prime lending rate. The prime rate is used to determine the variable interest rate that the different financial institutions set on mortgages and loans. As of September 6, 2024, the prime rate in Canada is 6.45%. If you are planning to decide on a new Line of Credit with a variable rate, it’s important to keep an eye on the prime rate as well.
How does the prime rate function?
The prime rate is the base of the interest rate that lenders charge on certain loans. It includes car loans, variable-rate mortgages and Home Equity Lines Of Credit (HELOCs).
Usually, you only have to pay a certain prime rate on the loan and not the actual one. The rate is dependent on the amount you’ve borrowed and the condition of the market, lending you the loan. In a year, the prime rate usually changes about 8 times. In 2024, the prime rate has changed 3 times up until now.
Overview of Canada Prime Rate Increase 2025
| Article | Canada Prime Rate increase 2025 |
| Country | Canada |
| Year | 2025 |
| Present Prime Rate | 6.45% |
| Category | Finance |
Increase of Prime Rate in Canada in 2025
Until now, there has been no news about an increase of the Prime Rate in Canada in 2025. In fact, in this year the rate has been decreased twice to bring back the inflation to 2% of target.
A decrease in the Prime Rate leads to a decrease in the interest rate on variable mortgages, and the line of credit will also decrease. The latest information about the interest rate has decreased the overnight rate to 4.25%. It has also brought the Prime rate to 6.45%.
History of Canada Prime Rate
- In 1981, Canada’s Prime Rate reached the highest record of 22.75%. But, in 2009 it fell down to 2.25%.
- From 2020 to 2024, the prime rate varied from 2.45% to 7.20%.
The below chart represents a descriptive increase and decrease in the past years:-
| Effective Date | Prime Rate | Change |
| September 4, 2024 | 6.45% | -0.25% |
| July 24, 2024 | 6.70% | -0.25% |
| June 5, 2024 | 6.95% | -0.25% |
| July 12, 2023 | 7.20% | 0.25% |
| June 7, 2023 | 6.95% | 0.25% |
| January 25, 2023 | 6.70% | 0.25% |
| December 7, 2022 | 6.45% | 0.50% |
| October 26, 2022 | 5.95% | 0.50% |
| September 6, 2022 | 5.45% | 0.75% |
| July 13, 2022 | 4.70% | 1.00% |
| June 1, 2022 | 3.70% | 0.50% |
| April 13, 2022 | 3.20% | 0.50% |
| March 2, 2022 | 2.70% | 0.25% |
| March 29, 2020 | 2.45% | -0.50% |
| March 16, 2020 | 2.95% | -0.50% |
| March 4, 2020 | 3.45% | -0.50% |
| October 24, 2018 | 3.95% | 0.25% |
Forecast of Canada Mortgage Rates in 2025
- Variable mortgage rates started declining in June 2024 after being on a peak from July 2023 to June 2024. It is anticipated that the variable mortgage rate will continue to decline in 2026.
- Fixed mortgage rates were on the peak from October 2023 to December 2023.
- In 2025, a 5-year fixed is anticipated to reach its lowest. In 2026, a 3-year fixed is anticipated to reach its lowest level.
| Home Page | https://www.easthamptonchamber.com/ |
FAQs for Canada Mortgage Interest Rate Forecast 2025
The Prime Rate in Canada is 6.45%, latest by September 6, 2024.
No, there is a difference between the Policy Interest Rate and the Prime Rate.
| Policy Interest Rate | Prime Rate |
| It is also acknowledged as an overnight rate. | It is also acknowledged as the prime lending rate. |
| It is usually lower than the Prime Rate. | 2) It is usually higher than the Policy Interest Rate. |
| Policy Interest Rate is determined by the Central Banks. Commercial banks use it as a base rate for lending. | 3) Prime rate is set by each of the financial institutions which is influenced by the Bank of Canada (BOC). |
Riya Claire is the Editor-in-Chief of the East Hampton Chamber Portal. She holds a degree in Mass Communication, an MBA in Finance, and a diploma in HR, making her a versatile professional for an online portal