Royal Bank Prime Lending Rate and How It Impacts You

The Royal Bank Prime Lending Rate is a benchmark interest rate that affects many Canadians. It's a key indicator of the overall health of the economy.

If the Prime Lending Rate is high, it means borrowing money is more expensive. Conversely, when it's low, borrowing is relatively cheaper. This rate influences the interest rates on mortgages, credit cards, and other types of loans.

The Prime Lending Rate is set by the Royal Bank of Canada, one of the country's largest banks. It's based on the bank's assessment of the current economic conditions.

In simple terms, the Prime Lending Rate is a rate that banks use as a reference point for other interest rates.

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The Royal Bank Prime Lending Rate is currently at 5.450%. This rate is the basis for RBC's variable-rate lending products, like mortgages, credit cards, and lines of credit.

RBC's prime rate is tied to the Bank of Canada's overnight rate, and when it changes, RBC's prime rate follows suit. For example, in January 2025, RBC's prime rate was lowered to 5.2%.

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A decrease in the prime rate can save borrowers with a variable mortgage rate money on their monthly interest payments. On a $500,000 mortgage, a 0.25% decrease in the prime rate would save you approximately $104.17 per month.

Here's a breakdown of how much you could save on your monthly interest payments with a $500,000 mortgage:

RBC's prime rate is used to set the rate for many loans, with a margin added to result in a higher interest rate above prime, or a discount allowing a rate below prime.

In Canada, RBC sets its own prime rate, which is typically the same as the prime rates of other major banks. Changes in the prime rate usually follow changes in the Bank of Canada’s policy interest rate.

RBC's prime rate is the basis for its variable-rate lending products, like mortgages, credit cards, and lines of credit. These products are affected by changes in the Bank of Canada's overnight rate.

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RBC's prime rate was lowered to 5.2% on January 30, 2025. This change in the prime rate will impact the cost of borrowing for RBC's variable-rate lending products.

Variable rate borrowers will see an immediate impact of the new rate on their next regular payment. The new prime rate is usually effective the following business day after the Bank of Canada announces a rate decision.

Today's Royal Bank of Canada Prime Rate is 5.450%.

The prime rate is what RBC uses to set the rate for many loans, with a margin added to result in a higher interest rate above the prime rate.

In Canada, each bank sets its own prime rate, but typically the prime rates of major banks are the same, following changes in the Bank of Canada's policy interest rate.

Some loan types, such as secured loans like variable rate mortgages and HELOCs, have an interest rate closer to the prime rate.

Variable rate borrowers will see an immediate impact of the new rate on their next regular payment when the Bank of Canada makes a rate decision.

RBC will usually announce its new prime rate the same day as the Bank of Canada's rate decision, with the new rate being effective the following business day.

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High Ratio Mortgages are available to customers who put down less than 20% on a purchase transaction and meet certain conditions.

The Royal Bank offers a 5 Year Fixed High Ratio Mortgage with an APR of 4.620%. This is a great option for those who want a fixed rate for a set period of time.

The 5 Year Variable High Ratio Mortgage is also available, with an APR of 4.680%. This option is tied to the RBC Prime Rate, which is currently 4.650% (RBC Prime Rate - 0.800%).

If you're considering a High Ratio Mortgage, it's worth noting that the RBC Prime Rate can fluctuate over time, affecting the interest rate on your mortgage.

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RBC's variable mortgage rates can rise or fall many times during your term, affecting how much of your monthly payment goes toward interest or the principal.

You can switch to a fixed rate mid-term without incurring any penalties with a variable-rate mortgage from RBC.

The rate for a variable mortgage is tied to RBC's prime rate, so any change to the prime rate will cause your variable rate to change too.

If RBC's prime rate decreases, your variable rate will decrease immediately, causing the interest portion of your mortgage payment to change.

Your mortgage payment amount will not change, but you'll pay more interest with each payment, increasing your mortgage amortization and interest costs.

Borrowers with an adjustable-rate mortgage will see an increase in their regular mortgage payments when the prime rate increases, and should budget for any increases.

RBC might offer a variable mortgage at Prime - 0.20%, meaning the rate would be the RBC Prime Rate minus 0.20 percentage points.

For example, if the mortgage prime rate is 5.2%, the variable mortgage rate would be 5%.

High-ratio mortgages, which are insured mortgages with a down payment of less than 20%, might have a larger discount to prime, such as Prime - 0.45%.

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Mortgage term lengths can vary significantly depending on the type of mortgage you choose. At RBC, you can opt for a fixed-rate mortgage with a term length between one and 10 years.

For those who prefer flexibility, RBC offers variable rate mortgages with term lengths of three and five years. I've seen some people choose variable rate mortgages to take advantage of potentially lower interest rates.

If you're unsure about your financial situation or want to keep your options open, a convertible mortgage with a term length of six months might be the way to go. This option allows you to convert to a different type of mortgage later on.

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The RBC Visa CreditLine is a great option for small business owners who need a line of credit. The interest rates for this credit line range from 8.10% to 17.10% above the Prime Lending Rate.

This means that if the Prime Lending Rate is 5%, the interest rate for the Visa CreditLine would be 7.99% to 16.99%. It's essential to note that these rates can change over time, so it's crucial to review the terms and conditions before applying.

The Royal Bank of Canada's prime lending rate is a benchmark interest rate that affects many Canadians. It's a key rate used to determine the interest rates on loans and lines of credit.

The prime lending rate is determined by the bank's economists and is based on the current economic conditions. This rate has been in place since 1950.

The Royal Bank's prime lending rate has a significant impact on the Canadian economy. It's used as a reference rate for other lenders, such as credit unions and trust companies.

The prime lending rate is typically around 3-5% higher than the overnight lending rate set by the Bank of Canada. This rate helps to control inflation by influencing the cost of borrowing.

The Royal Bank's prime lending rate is reviewed regularly by the bank's economists. They consider a range of factors, including inflation, economic growth, and employment rates.