Changes to the prime rate have a direct impact on variable rate mortgage holders. Typically, when the Bank of Canada increases/decreases the overnight rate, commercial banks will follow suit and increase/decrease their prime lending rates. They are not required to do so, but the majority of the time they move in lockstep with one another. Banks will offer consumers either a discount or premium to the prime rate when lending money for mortgages, which is based on their internal economics and required rate of return.
The following chart shows how the prime rate has changed over time and is plotted alongside the average 5 year fixed mortgage rate.
The following chart shows how the prime rate has changed over time and is plotted alongside the average 5 year fixed mortgage rate.
| Date | Prime Rate | 5 Yr Fixed |
|---|---|---|
| 2023-03-08 | 6.70% | 6.49% |
| 2023-01-03 | 6.70% | 6.49% |