HELOC rates in Canada: how prime plus a spread works
Your HELOC rate is your lender's prime rate plus a spread. Here's how each part is set, what a Bank of Canada rate change does to your monthly interest, how prime has moved since 2019 and how to negotiate a better spread.
HELOC rates in Canada are usually variable and quoted as your lender's prime rate plus a spread, for example prime plus 0.5% or prime plus 1%. Prime was 4.45% in the Bank of Canada's latest weekly data, so those examples work out to 4.95% and 5.45%. Prime typically moves when the Bank of Canada changes its policy rate, and your HELOC rate moves with it. Each 0.25-point change adds or removes about $10 a month in interest per $50,000 you owe. Your spread depends on your lender, equity, credit and product, and it's often negotiable.
Key takeaways
- →A HELOC rate = prime + a spread. With prime at 4.45%, prime plus 0.5% is 4.95% and prime plus 1% is 5.45%.
- →Prime follows the Bank of Canada. In the Bank's own data, prime has sat 2.20 points above the policy rate at every change since 2019.
- →A 0.25-point move is about $10 a month per $50,000 of HELOC balance, in interest.
- →The spread is the part you can negotiate. Equity, credit, product type and lender all affect it.
- →Rates move both ways. Prime ranged from 2.45% to 7.20% between 2019 and 2026, so plan your repayment for a range of rates.
Short answer: HELOC rates in Canada are usually variable and quoted as your lender's prime rate plus a spread [1]. The Bank of Canada's latest weekly prime rate is 4.45% [2], so a HELOC at prime plus 0.5% would be 4.95% today and one at prime plus 1% would be 5.45%. When prime changes, your HELOC rate changes with it, and the lender can adjust it at any time [1].
This guide explains how each part of the rate is set, what a change means in dollars, and how to get a better spread. If you're new to HELOCs, our home equity line of credit page explains how they work with us.
How a HELOC rate is built: prime plus a spread
Prime rate. Each lender sets its own prime rate, based largely on its cost of funding, which is influenced by the Bank of Canada's policy rate [2]. The Bank of Canada publishes a weekly prime-rate series; it was 4.45% for the week of October 21, 2026, with the policy rate at 2.25% [2].
Spread. This is the margin your lender adds to prime, set when you open the HELOC. FCAC's own example is a HELOC at prime plus 1% [1]. The spread usually stays fixed while prime moves, so your rate rises and falls with prime.
| Prime rate | Prime + 0.5% | Prime + 1% | Prime + 2% |
|---|---|---|---|
| 4.45% (latest weekly data) [2] | 4.95% | 5.45% | 6.45% |
Spreads shown are examples, not quotes. Your spread depends on your lender and situation, OAC.
What moves prime: the Bank of Canada connection
Prime typically changes when the Bank of Canada changes its policy rate [1][2]. In the Bank's published data, prime has stayed 2.20 points above the policy rate at every change since 2019 [2]. A 0.25-point change in the policy rate has meant a 0.25-point change in prime.
The Bank's next scheduled decision is Wednesday, October 28, 2026, at 9:45 a.m. ET [3]. Whatever it decides, the effect on a HELOC is easy to estimate:
| HELOC balance | Monthly interest at 4.95% | If prime rises 0.25 | If prime falls 0.25 |
|---|---|---|---|
| $25,000 | about $103 | +$5 | −$5 |
| $50,000 | about $206 | +$10 | −$10 |
| $100,000 | about $413 | +$21 | −$21 |
Simple monthly interest (balance × rate ÷ 12) at prime plus 0.5%. Illustrative only.
For a fuller view of what the decision could mean for renewals and variable mortgages, see our preview of the Bank of Canada's October 2026 decision.
How prime has moved since 2019
Rates move in both directions. Here's the Bank of Canada's prime-rate series at a few turning points [2]:
| Date | Policy rate | Prime rate | HELOC at prime + 0.5% | Monthly interest on $50,000 |
|---|---|---|---|---|
| January 2019 | 1.75% | 3.95% | 4.45% | about $185 |
| April 2020 (low) | 0.25% | 2.45% | 2.95% | about $123 |
| July 2023 (high) | 5.00% | 7.20% | 7.70% | about $321 |
| November 2025 to October 2026 | 2.25% | 4.45% | 4.95% | about $206 |
Prime and policy rates from Bank of Canada series V80691311 and V39079. HELOC rate and interest are illustrative.
The swing from the 2020 low to the 2023 high nearly tripled the interest on the same $50,000. That's why FCAC suggests making sure you could afford higher payments if rates rise, and having a repayment plan before you borrow [1].
Want to see what spread you could get? A licensed 8Twelve agent can compare HELOC options across 65+ lenders and show you the rate and total cost side by side, at no cost to you, OAC. Explore HELOC options
What decides your spread?
Lenders don't publish one spread for everyone. In our experience, these factors matter most:
- Product type. A HELOC combined with a mortgage and a standalone HELOC can be priced differently. FCAC notes a standalone HELOC used instead of a mortgage may carry a higher rate [1].
- Equity. A standalone HELOC usually needs more than 35% equity, and one combined with a mortgage at least 20% [1]. More equity generally helps.
- Credit and income. A strong credit history and stable income support a lower spread.
- Limit and relationship. Larger limits and moving your mortgage to the lender can improve the offer.
- Lender type. Banks, credit unions and alternative lenders price differently, which is where comparing through a broker helps.
FCAC notes you may be able to negotiate your HELOC interest rate with your lender [1].
How HELOC interest is charged
You pay interest only on what you've drawn, not on your full limit [1]. Depending on the lender, your minimum payment may be interest only, or interest plus some principal [1]. In our experience, most lenders calculate HELOC interest daily on the balance and charge it monthly, so paying down the balance early in the month trims the interest a little.
Two things to watch:
- Rate-change notices. Federally regulated lenders must tell you in writing within 30 days of changing your HELOC rate [1].
- Fees. Setup can include appraisal, legal, title search and administration fees, and some lenders charge monthly or cancellation fees [1]. Compare these along with the rate.
HELOC rates vs mortgage rates
HELOC rates are usually higher than mortgage rates, partly because you can borrow and repay at will. In our illustration, $50,000 at a 4.95% HELOC rate costs about $206 a month in interest, versus about $177 at a 4.29% fixed mortgage rate. In our experience, some lenders that combine a HELOC with a mortgage let you lock part of the balance into a fixed-rate term, which can suit a balance you'll carry for years.
HELOCs also count toward your debt ratios. Banks must apply the stress test when you take out a HELOC, qualifying you at the higher of 5.25% or your contract rate plus 2% [4]. For a side-by-side look at fixed and floating costs on a mortgage, see our guide to fixed vs variable mortgages.
How to get a better HELOC rate
- Ask for the spread in writing and compare it with at least one other offer.
- Negotiate. Use a competing offer as leverage; FCAC confirms HELOC rates can be negotiable [1].
- Compare total cost, including setup and annual fees, not just the spread [1].
- Ask for a limit you need, not the maximum. FCAC suggests a lower limit can help you avoid overspending [1].
- Ask about fixed-rate options if you'll carry a balance for years.
- Pay more than the minimum. Interest-only payments won't pay off the loan [1].
When a HELOC may not be the cheapest option
- You're at renewal and need a lump sum: adding it to your mortgage may get a lower, fixed rate. Our complete mortgage refinance guide explains how, and our home equity takeout guide compares every way to borrow against your home.
- You're paying off high-interest debt for good: a structured payoff may suit you better than revolving credit. See our debt consolidation mortgage guide.
- You want rate certainty: a fixed-rate mortgage or a locked portion may fit better than a fully variable line.
From our desk: Borrowers often focus on prime, which no one controls, and overlook the spread, which is negotiable. On a $100,000 balance, half a point of spread is about $42 a month, every month, for as long as you carry it.
Your HELOC rate has two parts: prime, which follows the Bank of Canada, and your spread, which you can often negotiate. Plan your payments for a range of rates, compare spreads and fees across lenders, and set a payoff plan so the balance actually goes down.
Run the numbers: see how a payoff schedule would look with our mortgage payment calculator, or read whether to lock a rate hold before the Oct 28 decision.
This article is for general information only and isn't financial, legal or tax advice. Rates, products and terms change without notice and are available on approved credit (OAC). The rate and terms you qualify for depend on your individual financial situation, including credit, income, property and loan-to-value. "Best rates" means the most suitable options available for your situation, not a guarantee of the lowest rate. Example rates and payments are for illustration only, as of October 2026, and are not an offer. 8Twelve Mortgage arranges mortgages through 65+ lenders and does not lend directly. Licensed across Canada — see our licences.
Example rates are for illustration only, as of October 26, 2026, and are not an offer. Your actual rate depends on your situation, OAC. Prime and policy rates are from the Bank of Canada's published series; each lender sets its own prime rate. HELOC interest is shown as simple monthly interest on a constant balance. Rules checked against FCAC and the Bank of Canada on October 26, 2026.
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Last reviewed on October 27, 2026