Prime rate is suggested by the Bank of Canada. Most banks in Canada base their prime lending rate on the Bank of Canada's prime rate.
In Canada, the prime rate has been as high as 22.75% in 1981 to as low as 2.25% in 2009.
How is the Prime Rate used?
Variable rate mortgages are always linked with the prime rate. For example, if prime rate is at 2.85%, variable rate mortgage rate will look like this:
Prime – 0.20% = 2.65%
Home equity credit lines, or HELOC, are also linked with the prime rate. If prime is at 2.85%, then home equity credit line interest rate would look like this:
Prime + 1% = 3.85%
If you want to know more about prime rate in Canada or Canadian Mortgage Rates in general, please contact one of the mortgage specialists.