Canada Interest Rate & Mortgage Rates | Mortgages.ca
If you’ve searched “what is the interest rate in Canada?” you’re not alone. Headlines talk about the Bank of Canada, lenders announce prime rate changes, and mortgage rates move up and down — often for different reasons.
Right now, Canada’s key benchmark interest rate is the Bank of Canada’s target for the overnight rate, which currently sits at 2.25% after a rate cut on October 29, 2025.
But that’s only the starting point. Let’s break down what “the interest rate” actually means for Canadian home buyers and homeowners — and how a broker like Mortgages.ca can help you turn those rate changes into a smart mortgage strategy.
1. Canada’s key interest rate today: the Bank of Canada policy rate
The Bank of Canada (BoC) sets the target for the overnight rate — often called the policy interest rate. This is the short-term rate that major financial institutions charge each other for overnight lending. It’s also the main tool the BoC uses to control inflation.
As of late November 2025:
- The target overnight rate is 2.25% following several cuts since 2024.
- This rate is updated eight times a year on a pre-set schedule.
When you hear on the news that “Canada’s interest rate changed,” this is usually the rate they’re talking about.
Why it matters for you:
Changes to the overnight rate ripple through the economy. They affect borrowing costs for:
- Variable-rate mortgages
- Lines of credit and HELOCs
- Personal loans, car loans, and some credit cards
2. From policy rate to prime rate: the link to your mortgage
After the Bank of Canada adjusts the overnight rate, major lenders usually respond by changing their prime rate — the rate they use as a base for variable-rate products.
Here’s the basic chain reaction:
- BoC policy rate moves (for example, down from 2.50% to 2.25%).
- Lenders adjust prime rate, typically a bit higher than the BoC rate.
- Your variable mortgage, often expressed as prime ± a discount or premium (e.g., prime – 0.80%), changes accordingly.
A 0.25% cut to the BoC rate doesn’t always translate into the exact same savings on your mortgage — but it’s a strong signal of the direction of borrowing costs.
3. How interest rates shape Canadian mortgage rates
It’s tempting to think there’s a single “mortgage interest rate” in Canada. In reality, what you pay depends on your product type and your situation.
Variable mortgage rates
Variable-rate mortgages are directly tied to your lender’s prime rate. When the BoC cuts or hikes the policy rate, prime usually moves in the same direction, and variable-rate borrowers feel that change relatively quickly.
On Mortgages.ca’s Today’s Market Rates page, you can see how variable options compare and how they shift over time as the rate environment changes.
Fixed mortgage rates
Fixed-rate mortgages work differently. They’re influenced more by Canadian bond yields and investor expectations about future interest rates and inflation than by the BoC’s current rate alone.
So even if the Bank of Canada holds or cuts its rate, fixed mortgage rates can:
- Stay flat
- Move in the opposite direction
- Change days or weeks before a BoC announcement
This is why you’ll often see headlines about rate cuts but still notice fixed mortgage offers moving around.
4. So… what is a “good” interest rate in Canada right now?
There’s no single “good” rate that fits everyone. Your ideal rate depends on:
- Credit score and income
- Down payment size and whether your mortgage is insured, insurable, or uninsured
- Property type and use (primary residence vs. rental)
- Term and amortization
- Fixed vs. variable preference and your risk tolerance
A better question than “What is the interest rate in Canada?” is:
“What is the best rate and mortgage strategy for my situation?”
The team at Mortgages.ca regularly compares lenders across the country to help clients secure competitive rates that also line up with long-term goals. Their guide to the best mortgage rates in Canada is a helpful starting point if you’re comparing offers.
5. Interest rate outlook: why future moves still matter
Even if you lock into a fixed rate today, the direction of interest rates still matters for:
- Renewal and refinancing decisions
- Investment properties and future purchases
- Overall affordability and housing demand
Mortgages.ca’s recent Mortgage Rate Forecast Canada 2025 explains how moderating inflation and the BoC’s cautious stance could lead to more stability — and opportunities for buyers and refinancers over the next couple of years.
Understanding the big picture can help you avoid short-term panic and make decisions that still work in three, five, or ten years.
6. Practical steps: how to make today’s interest rate work for you
Here are some concrete moves to consider if you’re watching Canadian interest rates and wondering what to do:
1. Clarify your time horizon
- Short-term (1–3 years):
If you plan to move, sell, or refinance soon, flexibility often matters more than squeezing out the last 0.05% in rate. - Long-term (5+ years):
Payment stability and penalty considerations become bigger factors.
A broker can help you weigh a shorter fixed term, a variable rate, or a hybrid strategy based on your plans.
2. Compare fixed vs. variable with real numbers
Instead of guessing, plug your scenario into the Mortgages.ca Purchase Calculator to see how different rates and terms would affect your monthly payment and total interest over time.
Seeing the actual dollar impact can make your decision much clearer.
3. Choose the right mortgage product — not just the lowest rate
The fine print around penalties, prepayment options, porting, and refinance flexibility can matter even more than a small rate difference.
The Mortgage Products in Canada page on Mortgages.ca walks through common options such as fixed, variable, refinance, investment, and new-to-Canada programs, so you can match your product to your goals.
7. When it might be time to refinance or renew early
Today’s rate environment may open the door to:
- Consolidating higher-interest debt into your mortgage
- Refinancing to lower your payment or shorten your amortization
- Renewing early if you’re worried your current lender isn’t offering competitive terms
Because Mortgages.ca works with multiple lenders — including banks, credit unions, and alternative lenders — they can often find options that your primary bank doesn’t mention.
A quick conversation with a broker can reveal whether a move makes sense now or if it’s better to wait until your renewal date.
8. Key takeaways: more than one “interest rate” in Canada
To recap:
- Canada’s key interest rate is the Bank of Canada’s policy rate, currently 2.25%, which sets the tone for borrowing costs across the country.
- Lenders use this benchmark to set their prime rate, which directly influences variable-rate mortgages and lines of credit.
- Fixed mortgage rates are driven more by bond markets and expectations about future rates and inflation.
- The “best” interest rate for you depends on your personal goals, risk tolerance, and timeline, not just today’s headline number.
If you’re buying, renewing, or refinancing anywhere in Canada — and especially if the constant rate headlines are stressing you out — connecting with a broker who lives and breathes this stuff can make the process much simpler.
The team at Mortgages.ca is here to help you understand how today’s Canadian interest rate environment fits into your bigger financial picture, and to find a mortgage solution that makes sense for you now and later,