Following the Bank of Canada’s latest interest rate cut of 25 basis points, Canada’s six largest banks and many other banks have reduced their prime interest rates to 4.45%. TD’s standalone mortgage offer also dropped 25 basis points, but remains just over 4.60%, a difference that dates back to a 2016 pricing adjustment.
The last time key interest rates were at this level was in June 2022, just before the Bank of Canada began a rapid tightening policy that sent borrowing costs rising to a 22-year high. Since then, bank prime rates have fallen by a cumulative 255 basis points, one of the fastest easing cycles in recent memory.
What this means for mortgage borrowers
For those with an adjustable-rate mortgage, the latest rate cut means immediate savings of about $14 per month for every $100,000 of mortgage debt amortized over 25 years. Borrowers with a fixed-payment variable mortgage will see more of their payments go toward repaying principal, even if their monthly payments don’t change.
The cuts also provide relief to those with home equity lines of credit (HELOCs) and personal lines of credit, both of which are directly tied to prime loans. Once lenders adjust their interest rates, their interest costs will immediately drop.
Across the big six banks, about a third of outstanding mortgages are on variable rates, down from highs during the pandemic but still significant.
Most of these are fixed-payment variable mortgages, offered by lenders such as TD Bank, Royal Bank of Canada and Canadian Imperial Bank of Commerce, where payments stay the same as interest rates fluctuate. By comparison, BMO and Scotiabank offer true adjustable-rate mortgages, meaning payments can rise or fall instantly as the prime loan changes.
While fixed-rate mortgages are not directly affected by changes in prime loans, they are priced based on Canadian government bond yields, which have been trending lower overall this year. However, the five-year Treasury yield climbed to 2.68% today, up 11 basis points, tempering market expectations for further rate cuts after the Bank of Canada said its policy rate is currently at an “appropriate level” to keep inflation close to target.
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5-Year Bond Yield Bank of Canada Bank Prime Rate Six Major Banks Fixed Rate Mortgage Prime Rate Variable Rate Mortgage Variable Rate
Last modified: October 29, 2025
