Is Prime Minus 1% A Good Variable Rate?

Prime minus 1.00% is 3.70% at the new 4.70% prime, and it sits near the top of what borrowers reported on the board in October 2026. Reports ranged from about prime minus 0.65 to prime minus 1.10, with the deepest cut on a broker quote and on a renewal offer with no lender named, and the shallowest on a broker pre-approval. Whether it is good depends on the file, the term and what comes with the discount.

A discount is a distance from prime, and prime moved on October 29. A discount that looked good on October 20 is the same discount today, but the rate under it is 0.25 higher. The honest question is whether you are getting the best discount your file can pull, and what the contract gives up in exchange.

Where Prime Minus 1 Sits On The Board

The rows below are borrower reports, quoted against 4.45% prime. They are sorted from deepest discount to shallowest, with the rate they imply at 4.70%.

The pattern is not subtle. Fresh approvals and a broker quote sat at prime minus 1.00 to 1.10. Bank renewal offers to existing customers sat at prime minus 0.70 and 0.87. RBC and BMO each appear twice: each bank's renewal offer was shallower than its quote or approval on a purchase. The difference is who is negotiating and from which position.

Insured Versus Uninsured

An insured mortgage, where the down payment was under 20%, carries default insurance and the lender's risk is lower. Lenders usually price insured files cheaper. Aggregators advertised the lowest 5-year variable about 3.41% insured around October 28, which is prime minus about 1.04 against the old prime, against an uninsured range of roughly 3.64% to 4.29%. That is prime minus 0.81 to prime minus 0.16 against the old 4.45%.

So the same words, prime minus 1, can mean a very strong deal on an uninsured file and an ordinary one on an insured file. The insured or uninsured guide explains why. Two other conditions affect it: the property type (one RBC investment property row was 3.74% on October 14) and the loan-to-value on the day.

What Prime Minus 1 Costs In Dollars

A balance of $500,000 over 25 years at prime minus 1.00, 3.70% at the new prime, is $2,549.42 a month. At prime minus 0.70, 4.00%, it is $2,630.10. The difference of $80.68 a month is $4,840.72 over a five-year term in payments alone, before counting what the balance does. For comparison, the lowest advertised 5-year fixed around October 28 was about 4.49% insured, $2,764.59, which is $215.16 above the 3.70% variable.

That gap is the reason people take variable at all. It is also the amount of risk being taken: prime would need to average 0.79 points higher than today, about three more 25 point increases, for the variable to cost the same as that fixed over the term. The Bank of Canada has not committed to any of them, and BMO, CIBC and Desjardins each expect one more rather than three. Those are their views and can change.

Discount Is Only Half The Contract

A big discount with a bad clause is not a bargain. Four terms to ask for in writing, in the same message as the rate:

• Whether the payment is adjustable or fixed while the rate moves.
• The penalty to leave, normally three months' interest on a variable, which on $500,000 at 3.70% is $4,625.00.
• Whether you can convert to a fixed rate and what rate is offered when you do.
• Any conditions that could raise the rate later, such as a change in loan-to-value or a lapse in insurance.

Terms differ by lender as much as discounts do, so the clauses deserve the same comparison as the rate.

Prime Minus 1 Next To Fixed Offers On The Same Letters

Two renewal threads on the board include both products. The BMO letter from October 13 listed the 5-year variable at 3.58%, prime minus 0.87, with a 5-year fixed at 4.79% on an insured file. The Scotiabank early renewal from October 23 listed a 3.65% variable, prime minus 0.80, with a 5-year fixed at 4.69%.

At the new prime, those variables sit at about 3.83% and 3.90%. On $500,000, the BMO pair is $2,584.23 against $2,848.54, and the Scotiabank pair $2,603.07 against $2,820.42. A prime minus 1.00 variable at 3.70%, $2,549.42, would sit $34.80 under the first variable and $53.64 under the second. Those are real dollars, but they are not the large gaps; the bigger gap in each letter is between that bank's own fixed and variable. A discount deeper than the letter's is worth asking for, and so is a lower fixed.

What A Deeper Discount Is Worth In Dollars

Every 0.10 of discount on $500,000 at 25 years is worth about $26.75 a month, or $1,605.05 over a five-year term in payments. Moving from the RBC renewal row at prime minus 0.70 to prime minus 1.00 takes the rate from 4.00% to 3.70% and the payment from $2,630.10 to $2,549.42, a saving of $80.68 a month. That is the number to hold in mind when a lender says the letter is as low as it goes. The October rows say it often is not.

What To Ask For At Renewal

The renewal letter is the opening bid. In the October rows, the bank letter's discount was shallower than the fresh-approval rows. Federal rules mean the renewal statement has to arrive at least 21 days before the term ends, and many lenders will hold a rate about 120 days ahead, though that varies. Since OSFI's November 2024 change, an uninsured straight switch at renewal does not need a new stress test with federally regulated lenders, which makes shopping elsewhere easier than it was. The renewal timing guide has the dates.

Ask a licensed mortgage broker to price the variable at the discount, with the penalty and conversion terms stated, and to price a fixed quote for the same file at the same time. Request cheaper rates and write "prime minus" next to the number you want beaten. Then compare payments with the payment formula guide rather than the rate alone. For the wider decision, see fixed or variable after a rate hike.

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