Details On The Prime Rate Of Scotiabank - Best Mortgage Rates

The prime rate can be something that many people aren’t familiar with, and as a result, miss out on better rates. Educate yourself about Prime Rates now.

About Scotiabank’s Prime Rate

The prime rate is known as the typical lending rate that Canada’s banks and financial institutions use to set the interest rates for variable lines of credit, loans, and mortgage. The prime rate for Scotiabank is currently sitting at 3.95%.

Along with many other banks, Scotiabank will in most cases, only charge its prime rate in response to the Bank of Canada (BoC) interest rate policy Generally, Scotiabank will change its prime rate by the same amount when the BoC increases or lowers the key rate (known as the target for the overnight rate). For instance, if the BoC increased the overnight rate by 25 basis points (bps), Scotiabank would also probably raise its prime rate by 25 bps.

Some exceptions to this law have been made. When the BoC lowered interest rates by 25 bps, Scotiabank only decided to lower their prime rate by 15bps, and so did many other big banks in Canada. Even though it’s not usual for a bank to change its prime rate independent of BoC interest rates, these adjustments are known to happen at any given time.

Does Scotiabank Prime Rate Affect Mortgage Rates?

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The interest rate will be calculated as the Scotiabank prime rate, plus or minus a certain percentage point when you obtain a variable mortgage from the Scotiabank. For instance, if the Scotiabank prime rate is 3.00%, and your mortgage rate is prime minus 0.50%, your mortgage rate would be 2.50%.

If Scotiabank changed its prime rate, it would increase your mortgage rate by the same amount. For example, if the prime rate of the Scotiabank was elevated to 3.25%, the mortgage rate will increase to 2.75%.

The rule does not apply to fixed mortgage rates. When you accept a fixed-rate mortgage, the mortgage rate will not adjust over the entire term. In the event rates go up, this mitigates your risk because your rate will not increase. When rates go down though, you will not reap the added benefit. Fixed rates are better if you think mortgage rates are going to increase, or if you want security in knowing exactly what you’re going to be paying regardless of what’s going on in the market.

Want to compare Scotiabank’s Prime Rate to other Scotiabank Mortgage Rates? Click Here to check our comparison table.