What Does Prime At 4.70% Do To A Variable Payment?

Prime at 4.70% raises a variable mortgage payment by about $13.32 a month for every $100,000 owed, at 25 years remaining and an unchanged discount. A prime minus 0.90 contract moves from 3.55% to 3.80%. On $500,000 that is $2,509.57 to $2,576.17, or $66.61 more. The table below shows five balances, and how a fixed-payment contract absorbs the same move differently.

Prime rose from 4.45% to 4.70% on October 29, 2026, the day after the Bank of Canada raised its overnight target to 2.50%. The size of the effect depends on the balance, the amortization left and the contract type, not on how loud the headline was. This post uses one discount, prime minus 0.90, so the balance is the only thing changing from row to row.

Payment By Balance At Prime Minus 0.90

Each figure is a 25-year amortization with Canadian semi-annual compounding. The first rate is prime minus 0.90 against the old 4.45%; the second is the same discount against 4.70%.

The relationship is almost linear. Double the balance and the extra cost roughly doubles. Anyone can scale the $500,000 row, which is also the one used in the policy rate guide, for their own balance. The formula behind it is in the payment formula guide.

Why The Discount Does Not Change The Jump

A deeper discount gives a lower payment, but the jump from a 25 point rise is nearly the same. Take $500,000 at prime minus 1.10, which was 3.35% and is 3.60% now. The payment goes from $2,456.93 to $2,522.81, a change of $65.89. At prime minus 0.70, from 3.75% to 4.00%, the change is $67.32. The differences between discounts are small at the margin; the real value of a bigger discount is the base payment, month after month, for five years.

That is why asking the lender or a broker to price the discount matters more than reacting to the prime change. Every borrower on prime minus anything sees roughly the same $13 per $100,000. The ones who negotiated a better discount start from a lower number.

What A Fixed-Payment Variable Does Instead

Some variable contracts hold the payment constant and let the interest portion rise. The cost does not disappear, it moves to the back end as a longer amortization. The effect on a fresh $500,000 balance, with the payment set at the 3.55% figure of $2,509.57, is as follows. At 3.80% the same payment takes about 26.1 years to clear the loan instead of 25. At 4.05%, if prime were to rise another 25 points and be passed through, it takes about 27.4 years. These are calculated from a fresh start; with years already paid down the stretch is shorter, and your lender's statement shows the real figure.

The case where this stops being theoretical is the trigger rate. If the interest charge in a month exceeds the fixed payment, the payment no longer covers it. At 3.80% on $500,000 the first month's interest is about $1,570.94 against a $2,509.57 payment, so there is plenty of room. Triggers matter for higher rates and balances with long amortizations. Your contract states the point and what the lender does at it.

What The Same Move Means At 30 Years

Insured first-time buyers and buyers of new builds can have 30-year amortization on an insured mortgage since December 15, 2024. A longer schedule cuts the payment but makes the increase slightly larger, because more of each payment is interest. On $500,000 at 30 years, the monthly payment at 3.55% is $2,251.93 and at 3.80% it is $2,321.33, a difference of $69.40. Compare that with $66.61 at 25 years. The lower base payment is the gain, and the extra five years of interest is the cost. The insured versus uninsured guide explains the premium that comes with a longer amortization.

Reading The Interest Portion

The payment is not the only place the move shows up. In the first month of a fresh $500,000 loan at 3.55%, about $1,468.34 of the payment is interest. At 3.80% it is about $1,570.94. The difference, $102.60, comes out of the principal portion in a fixed-payment contract and out of the borrower's pocket in an adjustable one. Either way it is the same 25 points working on the same balance.

As the balance falls, the effect shrinks. A borrower with $300,000 left from an older $500,000 loan sees the $39.96 figure in the table, not $66.61. The renewal wave matters here too: the Bank of Canada's staff work estimated that about 60% of outstanding mortgages renew in 2025 or 2026, which means many variable holders are on balances already smaller than their original loan.

One More Hike

The Bank of Canada said a further increase may be needed and that it will proceed carefully. BMO expects another 25 points in January 2027 (Financial Post). CIBC sees one more as likely and not above 2.75% overnight (Reuters). Desjardins also expects one more, with timing that depends on data. These are their views, not a schedule. The next decision is December 9, 2026.

If a second 25 point move happened and was passed through, a prime minus 0.90 rate would reach 4.05%. On $500,000 that is $2,643.67, which is $134.11 above the original $2,509.57. The lock-in post sets that against the fixed alternatives.

A Quick Way To Estimate Your Own

For a balance with about 25 years remaining and an unchanged discount, multiply the balance by 0.0001332 to estimate the monthly increase from this 25 point move. The result for $500,000 is $66.60, within a cent of the exact figure. The shortcut drifts as the amortization shortens: with 15 years left the increase per $100,000 is a little lower, and with 30 it is a little higher. The exact number uses the formula in the payment guide, and the lender's notice will state the real one.

It also works in reverse. If the notice shows an increase far from what the shortcut suggests, either the amortization is different from what you remember or the contract has a feature that changes the pass-through. Both are worth a call before the payment date.

What To Ask Before The Next Statement

Three questions cover most of it. Is your payment adjustable or fixed, and when does it change? What is your discount, written as prime minus a number? And how much is the penalty to leave? For a variable it is usually three months' interest, which on $500,000 at 3.80% is about $4,750.00. If a lender is offering a renewal, ask a broker to price a competing variable and fixed for the same term with the discount stated. Request cheaper rates and put the discount in the first line. For a plain comparison with fixed, see fixed or variable after a rate hike.

Questions

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