Prime Rate Changed to 2.85%. Slow Clap.

Luisa Hough • January 28, 2015

It’s official, as of today all the big Canadian banks have now lowered their prime rate. RBC was the first to announce they would drop their prime rate by .15% to 2.85%. BMO, TD and CIBC quickly followed with drops of their own, then the ScotiaBank and National Bank fell off the fence and landed at 2.85% as well. This is good news.

If you are a current variable rate mortgage holder, you are now paying less interest on your mortgage. Congratulations.

However, this is really only a half measure. The Bank of Canada dropped their overnight rate by .25% whereas the banks only lowered prime by .15%.

“We believe our announcement is a balanced approach which reflects our actual cost of funds and helps clients save money on products such as variable rate mortgages, lines of credit and floating rate loans,” RBC said in a statement. Hmmm…

3 Sides of the Coin

What to do, what to do? As all the pundits looked in, it appeared the banks really only had 2 choices, flip a coin, would they stay put or lower rates? However it would appear the banks found the middle ground and added a third side to the coin.

Side One. Don’t Move.

By lowering the overnight rate, the Bank of Canada reduced the costs of doing business for the banks. Had banks kept prime rate at 3%, they would have reaped all the benefits of the drop that was intended to stimulate the economy. The only stimulus would have been to bank’s shareholders.

The problem with not making a move would be the public outcry and the countless media stories about corporate greed and corruption that would no doubt follow. And rightfully so.

Side Two. Drop by .25%.

Usually when the overnight rate changes, all the banks follow suit in full measure without delay. Up or down. However as this is the first time in just over 4 years that the overnight rate moved, it wasn’t a quick and easy decision.

A full drop of .25% would have been consistent with past drops and most preferable in the public’s eye, but in the boardroom of every bank it would be a different story. Obviously banks want profitability, by simply passing on the rate drop to Canadians, from the bank’s perspective, it would be a missed opportunity to increase their bottom line.

Side Three. Take A Half Measure.

While not dropping prime rate elicits cries of corporate greed, and while dropping it by .25% is seen as a missed opportunity by bankers united… taking a half measure and dropping prime by .15% is actually quite brilliant.

Well played RBC, well played. For this you deserve a slow clap. Variable rate mortgage holders get their interest relief as prime goes down, and the banks get a little more profitability in the mean time. It was such a good idea that all the banks followed suit.

 

There may be a few groans about how the change should have been bigger going forward, but most likely this whole thing will become back page news in the next couple of days and all will be forgotten.

Now as broker channel lenders base their variable rate mortgages off the bank’s prime rate… regardless where your mortgage is at, if you are a current variable rate mortgage holder, you can expect to see a letter in the mail soon outlining the changes to your mortgage. If you want to talk it through with me, I am always available.

Let me leave you with this…

The real test will be what happens when the Bank of Canada increases the overnight rate? Will the banks take a half measure when increasing their rates? Probably not.

Recent Posts

Bank of Canada Holds Rate at 2.25% — April 29, 2026

By Luisa & Candice Mortgages • April 29, 2026
The Bank of Canada announced today that it is holding its target for the overnight rate at 2.25%, with the Bank Rate at 2.5% and the deposit rate at 2.20%. This decision comes against a backdrop of significant global uncertainty — and for Canadian homeowners, buyers, and anyone with a mortgage coming up for renewal, here's what it means.

Why a Mortgage Pre-Approval Protects Both Your Head and Your Heart

By Luisa & Candice Mortgages • April 22, 2026
Why a Mortgage Pre-Approval Protects Both Your Head and Your Heart There’s no denying it—buying a home is an emotional journey. In a competitive market, it can feel like you need to stretch beyond your comfort zone or bid above asking just to have a chance. That pressure can make it hard to separate what you want from what you can realistically afford. One of the biggest pitfalls buyers face is falling in love with a home that’s outside their price range. Once that happens, every other property seems like a compromise—even the ones that might have been a perfect fit otherwise. The best way to avoid this heartache? Get pre-approved before you start shopping. What a Pre-Approval Does for You A mortgage pre-approval gives you more than just a number—it provides clarity, confidence, and protection: Know your buying power : Shop within your true price range and avoid disappointment. Spot potential roadblocks : Uncover issues like credit bureau errors before you make an offer. Get organized : Learn exactly what documentation you’ll need so there are no surprises. Lock in a rate : Many lenders hold your rate for 30–120 days, giving you peace of mind if rates rise. Save yourself heartache : Protect yourself from falling for a home you can’t afford. Head vs. Heart Buying a home is about balance. Your head tells you what’s financially sound, your heart tells you what feels right—and both matter. A pre-approval helps bring those two sides together, so you can make confident choices without emotional stress clouding your judgment. The Bottom Line Looking at properties for fun is one thing—but if you’re serious about buying, a pre-approval is the smartest first step you can take. It sets realistic expectations, saves time, and protects your emotions along the way. If you’d like to explore your options and get pre-approved, I’d be happy to walk through the process with you. Let’s make sure you’re ready to shop with confidence.

Breaking Down the Real Costs of Homeownership

By Luisa & Candice Mortgages • April 15, 2026
Don’t Forget About Closing Costs When planning to buy a home, most people focus on saving for the down payment. But the truth is, that’s only part of the equation. To actually finalize the purchase, you’ll also need to budget for closing costs —the out-of-pocket expenses that come up before you get the keys. Closing costs can add up quickly, which is why they should be part of your pre-approval conversation right from the start. Lenders will even require proof that you’ve got enough funds set aside. For example, if you’re getting an insured (high-ratio) mortgage, you’ll need at least 1.5% of the purchase price available in addition to your down payment. That means a 10% down payment actually requires 11.5% of the purchase price in cash to make everything work. Let’s break down some of the most common expenses you should prepare for: 1. Home Inspection & Appraisal Inspection : Paid by you, this gives peace of mind that the property is in good shape and doesn’t have hidden problems. Appraisal : Required by the lender to confirm value. Sometimes this is covered by mortgage insurance, sometimes by you. 2. Legal Fees A lawyer or notary is required to handle the title transfer and make sure the mortgage is properly registered. Legal fees are often one of the larger closing costs—unless you’re also responsible for property transfer tax. 3. Taxes Many provinces charge a property or land transfer tax based on the home’s purchase price. These fees can range from hundreds to thousands of dollars, so you’ll want to factor them in early. 4. Insurance Property insurance is mandatory—lenders won’t release funds without proof that the home is insured on closing day. Optional coverage like mortgage life, disability, or critical illness insurance may also be worth considering depending on your financial plan. 5. Moving Costs Whether you’re renting a truck, hiring movers, or bribing friends with pizza and gas money, moving comes with expenses. Cross-country moves especially can be surprisingly pricey. 6. Utilities & Deposits Setting up new services (electricity, water, internet) can involve connection fees or deposits, particularly if you don’t already have a payment history with the utility provider. Plan Ahead, Stress Less This list covers the big-ticket items, but every purchase is unique. That’s why it pays to have an accurate estimate of your personal closing costs before you make an offer. If you’d like help planning ahead—or want a breakdown tailored to your situation—let’s connect. I’d be happy to walk you through the numbers and make sure you’re fully prepared.

Luisa & Candice Mortgages 

Contact Me Anytime!

The best way to get ahold of me is to submit through the contact form below. However feel free to give me a shout on the phone as well.

Contact Us