The Canada Revenue Agency held its prescribed interest rate at 3% for the third quarter of 2026, running from July 1 to September 30. It is the fifth consecutive quarter at that level, the longest stretch the rate has held steady since it last spent two years pinned at 1% before 2022.
The number that matters for planning is not the rate itself but what sits next to it. A five-year fixed mortgage now averages 4.93% at the Big Six banks and 5.07% across all conventional lenders, according to nesto.ca. The spread between what the CRA charges on a family loan and what a bank charges a mortgage renewer has rarely been wider.
What the Prescribed Rate Actually Locks In
A prescribed rate loan works by having a higher-income family member lend money to a spouse, common-law partner, or family trust at the CRA's prescribed rate in effect at the time the loan is made. The borrower invests the funds and pays the lender interest at that rate by January 30 of the following year. Investment income earned above the loan rate is taxed in the lower-income hands, not the lender's.
The mechanic that makes this work this quarter specifically is that the rate is fixed at the moment of borrowing, for the life of the loan, regardless of what the CRA sets in future quarters. A loan structured at 3% in August keeps that rate in 2027 even if the prescribed rate calculated for the first quarter rises to 4%. Five consecutive quarters at 3% have given families an unusually long runway to set this up. Nothing guarantees a sixth.
Where the Risk to That Window Comes From
The prescribed rate is calculated from the average yield on three-month Government of Canada Treasury bills in the first month of the preceding quarter, rounded up to the next whole percentage point. It does not move with the Bank of Canada's policy rate directly, but the two sit on the same short end of the yield curve that the Bank influences.
The Bank of Canada held its policy rate at 2.25% on June 10, citing a genuine two-directional bind: a soft domestic economy set against inflation running near 3% on oil prices tied to the Iran war. The US Federal Reserve, under new chair Kevin Warsh, struck a more hawkish tone at its June 17 meeting, with nine of eighteen Federal Open Market Committee members now projecting a rate hike before year-end. That divergence has already pushed Canadian bond yields higher than they would otherwise be, and a continuation could lift the Treasury bill yields that feed directly into the rate calculated for the fourth quarter.
Nine borrowing and lending rates that apply to Canadians and their corporations in the third quarter of 2026 show how far the CRA prescribed rate sits below every mortgage product on the list, and how much room exists for that gap to close.
The CRA prescribed rate is set using the average of three-month Government of Canada Treasury bills from the first month of the preceding quarter, rounded up. The Q3 2026 rate of 3% applies to loans made between July 1 and September 30.
The Account-Type Distinction That Matters
Prescribed rate loans apply to non-registered investment accounts and family trusts, not RRSPs or TFSAs, which already shelter investment income from tax regardless of who holds them. The strategy works best for households where one spouse has meaningfully lower income and the couple has investable capital sitting outside registered accounts, generating interest, dividend, or capital gains income that would otherwise be taxed in the higher earner's bracket.
For incorporated business owners, the relevant comparison is different. The CRA's rate for pertinent loans or indebtedness, which governs certain cross-border shareholder loan arrangements, sits at 6.3% for the third quarter, more than double the family prescribed rate and a reminder that the two regimes are not interchangeable for planning purposes.
Roughly a third of Canadian mortgage holders are expected to face higher payments at renewal this year, with five-year fixed borrowers seeing the steepest increases. A prescribed rate loan does not offset that cost directly, but for households with non-registered assets and an income gap between spouses, it remains one of the few borrowing costs in the system still priced near 2022 levels.