Prime rate is a floating rate that lenders use as the foundation for various lending products, like variable mortgage rates, credit cards and HELOCs.
The prime interest rate typically moves up and down with the Bank of Canada’s overnight target rate. For that reason, some people refer to it as “Bank of Canada prime rate.” That is incorrect because the Bank does not directly set prime. Lenders do.
People also refer to it as the “prime mortgage rate.” In Canada, very few lenders have a separate prime rate for mortgages; TD being one notable exception.
It’s important to remember that each lender sets its own prime rate. For that reason, lenders don’t always follow the Bank of Canada’s lead. In fact, there are multiple cases where lenders have not followed the Bank in dropping prime, much to the frustration of borrowers.