Toronto | October 31, 2025 — Canada’s six largest banks — RBC, TD, Scotiabank, BMO, CIBC, and National Bank — have cut their prime lending rate by 25 basis points to 4.45%, following the Bank of Canada’s latest interest-rate reduction.

The synchronized move came just hours after the central bank lowered its policy rate to 2.25%, citing weaker growth, softer labour markets, and persistent uncertainty around global trade.

What Happened

All Big Six lenders confirmed the change late Wednesday, effective immediately for new and existing borrowers.
Prime rate is the benchmark that influences most variable-rate mortgages, home-equity lines of credit (HELOCs), and personal loans in Canada.

While the cut itself may appear modest, it’s part of a broader easing cycle that began in mid-2025 as inflation drifted closer to the Bank’s 2 per cent target.

According to Mortgage Rates & News Canada, this is the first time since March 2025 that all major banks have lowered prime in lockstep — a signal that the mortgage market is finally responding to the central bank’s efforts to reduce borrowing costs.

Why It Matters for Borrowers

Roughly one-third of outstanding mortgages at Canada’s major banks are variable-rate. For these borrowers, even a 0.25 percentage-point cut can offer tangible relief.

A household with a $500,000 variable-rate mortgage could see monthly payments drop by $100–120, depending on amortization and rate structure.
Borrowers on adjustable-rate mortgages (ARMs) will feel the change almost immediately, while those with static-payment variable products may see slightly more of their payment applied toward principal.

HELOC customers also benefit directly, as their interest rates move in tandem with prime. The average HELOC rate now sits near 6.70%, down from roughly 6.95% earlier this month.

Caveats for Fixed-Rate Borrowers

For fixed-rate mortgages, the connection to the prime rate is less direct. Fixed terms are primarily driven by Government of Canada bond yields and lender credit spreads, both of which fluctuate with global market sentiment rather than central bank policy alone.

As a result, fixed-rate borrowers may not experience immediate relief — though the policy environment can influence yields over time.
Recent data from RateSpy shows five-year fixed mortgage rates hovering around 4.79–5.09%, only slightly below last month’s levels.

Mortgage brokers suggest that those approaching renewal may wish to compare both fixed and variable options now, as further policy changes could alter rate competitiveness in the months ahead.

Economic Context

The Bank of Canada’s October decision — its fourth rate cut of 2025 — reflects growing evidence of a slowing economy.

GDP contracted 1.6% (annualized) in Q2 2025
Job growth has softened, particularly in construction and retail sectors
Headline inflation is down to 2.3%, from a peak near 4% last year

The central bank also signaled that rates are now “about the right level” to balance inflation control and economic support — suggesting a possible pause ahead.

What Homeowners Should Consider

Mortgage experts advise borrowers to use this window strategically rather than reactively:

Review your mortgage type: Variable-rate products are once again competitive. If you’re on a fixed term, assess whether early renewal or conversion makes sense.
Check your amortization: Lower rates may allow for accelerated prepayments, reducing overall interest cost.
Plan for renewals: Even modest cuts can ease qualification stress tests for renewals and refinances.
Monitor bond yields: If yields fall further, fixed rates could follow — a key signal for buyers in the coming quarter.

Bottom Line

The Big Six prime-rate cut to 4.45% delivers modest but welcome relief for variable-rate borrowers and HELOC users.
For fixed-rate customers, the benefits will be slower to appear — but the signal from both the central bank and the lending sector is clear:
borrowing conditions in Canada are finally easing, if only gradually.