Bank of Canada Rate Update
Bank of Canada Rate Update
On April 16th, 2025 the Bank of Canada held its overnight rate at 2.75% after 7 straight cuts—but don’t let that pause fool you.
🔍 Important clarification: The overnight rate is NOT the same as the banks' Prime Rate. While the BoC rate stayed at 2.75%, the Prime Rate remains at 4.95%.
Meanwhile, tariffs from the US are disrupting everything. If they escalate, Canada could face a recession AND higher inflation—a mix known as stagflation. Why does it hit us harder? Because our economy is more trade-dependent than the US.
Despite the uncertainty, economists expect more BoC rate cuts this summer, which could trigger a rebound in home sales. Prices are already softening, inventory is up—meaning this might be your window to buy or refinance before the market shifts again.
To get a better understanding of how interests rates are set, let’s go back to some basics:
Fixed-rate mortgage rates in Canada are priced off of Government of Canada 5-year bond yields that are, in turn, influenced by the U.S. Treasuries.
Variable-rate mortgages are affected by the Bank of Canada's monetary policy, namely interest rate hikes and cuts that, in turn, impacts commercial banks' Prime lending rate.
Understanding the Prime Rate in Canada:
The Prime Rate is the interest rate that major banks in Canada use to set interest rates for variable loans/mortgages and lines of credit. It’s influenced by the Bank of Canada’s Overnight Rate, which is the rate at which banks borrow and lend to each other overnight.
Consider the prime rate as the foundation upon which these other interest rates are built. As the prime rate in Canada fluctuates, the interest rate you pay on your adjustable/variable rate mortgage also adjusts accordingly.
If you are like me, and you like to look at numbers, here is a table summarizing the Prime Rate changes in Canada from 2010 to today:
| Effective Date | Prime Rate | Change |
|---|---|---|
| April 16th, 2025 | 4.95% | 0.00% |
| March 12th, 2025 | 4.95% | -0.25% |
| Jan 29th, 2025 | 5.25% | -0.25% |
| Dec 11th, 2025 | 5.45% | -0.50% |
| October 23, 2024 | 5.95% | -0.50% |
| Sept 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 8, 2023 | 6.95% | +0.25% |
| January 25, 2023 | 6.70% | +0.25% |
December 8, 2022 | 6.45% | +0.50% |
| October 27, 2022 | 5.95% | +0.50% |
| September 8, 2022 | 5.45% | +0.75% |
| July 14, 2022 | 4.70% | +1.00% |
June 2, 2022 | 3.70% | +0.50% |
April 14, 2022 | 3.20% | +0.50% |
| March 3, 2022 | 2.70% | +0.50% |
| March 30, 2020 | 2.45% | -0.50% |
| March 17, 2020 | 2.95% | -0.50% |
| March 5, 2020 | 3.45% | -0.50% |
October 25, 2018 | 3.95% | +0.25% |
| July 12, 2018 | 3.70% | +0.25% |
| January 18, 2018 | 3.45% | +0.25% |
| September 7, 2017 | 3.20% | +0.25% |
| July 13, 2017 | 2.95% | +0.25% |
| July 16, 2015 | 2.70% | -0.15% |
| January 28, 2015 | 2.85% | -0.15% |
| September 9, 2010 | 3.00% | +0.25% |
| July 21, 2010 | 2.75% | +0.25% |
| June 2, 2010 | 2.50% | +0.25% |
As always, I am here to answer any mortgage related questions that you may have and help you crunch any numbers that you don’t quite understand - book a call here.