Money feels weird right now. If you've looked at your bank account lately or checked a mortgage statement, you've probably felt that low-level hum of anxiety that comes with Canadian interest rates. Everyone’s asking about the prime rate now Canada, trying to figure out if we’ve finally hit the bottom or if the Bank of Canada is just catching its breath before another climb.
Honestly? It's a bit of a stalemate.
As of mid-January 2026, the prime rate at most major Canadian financial institutions—think RBC, TD, Scotiabank, BMO, and CIBC—is sitting at 4.45%. It’s been stuck there since late October 2025. This follows a period where the Bank of Canada (BoC) aggressively chopped its overnight rate down to 2.25%. Banks generally keep their prime rate about 2.2% above whatever the BoC says, which is how we arrived at this 4.45% number.
But don't get too comfortable. While the rates have dropped significantly from the scary 7.20% peak we saw back in 2023, the "easy" wins for borrowers might be over for a while.
Why the Prime Rate Refuses to Budge
You've got to understand how Tiff Macklem and the folks at the Bank of Canada think. They aren't just looking at your mortgage; they're looking at the whole engine. Right now, inflation is hovering around that 2% target, but it's "sticky." That’s the word economists love to use when prices won’t stop creeping up in specific areas like rent or insurance.
The Bank of Canada held its rate steady at 2.25% during the December 10, 2025, announcement. They basically signaled that they’re in "wait and see" mode. This means the prime rate now Canada stays at 4.45% for the foreseeable future. Most analysts, including those at Scotiabank and RBC, aren't expecting any major shifts in the first half of 2026.
📖 Related: Fifth Third Bank Savings Account Bonus: How to Actually Grab This Cash
It’s a bit of a balancing act. If they cut more, they risk reigniting a housing market that's already starting to simmer. If they hike, they might crush the already-fragile per-capita GDP growth we’re seeing.
What This Means for Your Debt
If you have a variable-rate mortgage, you already know the drill. Your payment (or the amount of that payment going to interest) moves in lockstep with prime.
Let's look at the math, roughly.
If you have a $500,000 mortgage at Prime minus 0.50%, you're paying 3.95%.
Back in 2023, you might have been paying 6.70%.
That’s a massive difference—roughly $800 to $1,000 a month in "found money" for some households.
But for people with Home Equity Lines of Credit (HELOCs), the news is just "okay." HELOCs are almost always tied directly to prime, usually Prime + 0.5% or Prime + 1%. So, you're looking at borrowing costs around 5% or 5.5%. It’s better than the 8% we saw a couple of years ago, but it still isn't the "free money" era of 2021.
The 2026 Mortgage Renewal "Cliff"
There is a huge misconception that lower prime rates mean everyone is winning. They aren't.
We are currently in the middle of the "Great Renewal." Thousands of Canadians who signed five-year fixed-rate mortgages in 2021 at rates of 1.5% or 2% are hitting their renewal dates in 2026.
Even with the prime rate now Canada at 4.45%, these people are walking into a buzzsaw. They are going from a 2% rate to something closer to 4% or 4.5%. According to Bank of Canada data, the average household renewing a 5-year fixed mortgage in 2026 could see their monthly payment jump by nearly 20%.
That is a massive hit to the wallet. It’s the reason why the "vibe" in the economy feels so heavy despite the fact that rates are technically lower than they were last year.
Will the Prime Rate Fall Further?
This is the million-dollar question. If you listen to some market speculators, there's a small chance (maybe 12-15%) of a tiny cut in late January or March 2026. But the big banks are starting to lean toward "higher for longer" again.
RBC Economics recently suggested that the Bank of Canada might actually have to raise rates in 2027 if the labor market stays too strong or if productivity doesn't improve. So, the 4.45% we see today might be the "new normal."
💡 You might also like: How Much Do FDNY Make Explained (Simply)
Real-world impact on other loans:
- Car Loans: Most new car loans are fixed, but if you're shopping now, you'll see "prime-influenced" rates. Don't expect those 0% or 0.9% deals to come back. You're more likely looking at 5.9% to 7.9%.
- Credit Cards: Most cards have fixed high rates (19.99%+), but "low-rate" cards are often Prime + a certain percentage. If prime stays at 4.45%, those cards will stay around 12-15%.
- Small Business Loans: This is where it hurts. Many business lines of credit are Prime + 2% or more. Paying 6.5% interest on an operating loan makes it hard to expand or hire.
Actionable Steps for 2026
Stop waiting for 2% again. It’s probably not happening. Instead, look at the prime rate now Canada as your baseline for the next 12 to 18 months.
1. Stress test your own budget. If prime stays at 4.45% (meaning variable rates around 4%), can you handle your payments? What if it goes up to 5%? If you’re within 12 months of a mortgage renewal, talk to a broker now. Don't wait for the letter from your bank.
2. Re-evaluate your HELOC. If you’re using a line of credit for long-term debt, consider "locking in" a portion of it into a fixed-term loan. Fixed rates are currently hovering around 3.8% to 4.2% for some terms, which is actually lower than the current prime rate.
3. Shop around for savings. While prime is 4.45%, some smaller lenders and credit unions are getting aggressive to win business. You might find a variable-rate "special" at Prime minus 0.9% (3.55%), which beats the big banks' standard offers.
The era of predictable, rock-bottom rates is over. We’ve entered a period of "choppy" stability. The best move right now is to pay down high-interest debt and assume that the current 4.45% prime rate is here to stay for at least the next few quarters.