- Bank of Canada policy rate: 2.50% from 2026-10-29 (raised 0.25 points; announced October 28, 2026).
- Prime in the Bank of Canada’s weekly series: 4.45% on 2026-10-28, before the increase took effect.
- Some banks adjust your payment when prime moves; others keep the payment fixed and change how much goes to principal.
- Closed variable mortgages at the big banks are usually broken for 3 months’ interest.
How a variable rate is built
Your rate = bank prime ± your spread. The spread is fixed for the term; prime is not. Many lenders compound variable rates monthly (check your contract), so try the “monthly” compounding setting in the payment calculator.
The Bank of Canada announced on October 28, 2026 that it was raising its policy rate by a quarter point to 2.50%; the next scheduled announcement is December 9, 2026. Banks set their own prime; confirm each bank’s current prime on its site.
5-year postedPrimePolicy rate
Adjustable vs fixed-payment variable
With an adjustable-rate mortgage, your payment changes when prime changes. With a fixed-payment variable, the payment stays the same and the split between interest and principal changes; if rates rise far enough you can reach a trigger point where payments no longer cover interest. Each bank’s products and wording are on its profile.
Breaking a variable mortgage
Penalties on closed variable mortgages are usually 3 months’ interest. What each big bank says:
| Bank | Penalty method, in the bank’s words |
|---|---|
| RBC Royal Bank | Greater of 3 months’ interest or IRD vs RBC’s posted rate for a similar term, less your rate reduction. Variable: 3 months’ interest. |
| TD Canada Trust | Higher of 3 months’ interest or IRD using TD’s posted rate for a similar mortgage minus your discount. Variable: 3 months’ interest. |
| Scotiabank | Greater of 3 months’ interest or IRD vs Scotiabank’s posted rate for the closest term, less your discount. Variable: 3 months’ interest. |
| BMO Bank of Montreal | See BMO’s prepayment calculator and prepayment-options PDF (formula not on the pages we could read). |
| CIBC | Greater of 3 months’ interest (at your rate + discount) or IRD vs CIBC’s current posted rate. Variable: 3 months’ interest at CIBC Prime. |
| National Bank | Higher of 3 months’ interest or 1 month’s interest (max $500) plus the interest differential. Variable: 3 months’ interest. |
Rules change. Every figure on this page links to the official source and shows when we checked it. If something looks out of date, tell us and we will re-check.
Frequently asked questions
Can I lock a variable into a fixed rate?
Often. Scotiabank, for example, says a Flex Value variable can be converted to a fixed term longer than the time remaining with no prepayment charge. Ask your bank for its conversion rules.
Sources
- Valet API: posted conventional mortgage rates (V80691333–35), prime (V80691311), policy rate (V39079) — Bank of Canada, checked Oct 31, 2026
- Policy interest rate — Bank of Canada, checked Oct 31, 2026
- Reduce or avoid prepayment penalties — FCAC, checked Oct 31, 2026
Educational information only, not financial, legal or tax advice. BankMortgages.ca is independent and is not affiliated with, endorsed by or paid by any bank named on this site. Bank terms change: confirm every rate and term with the lender and the official sources linked on each page before you act. Read the full disclaimer.