What is it?
A basis point (bp for short) is the unit people use to say how much an interest rate changed. One basis point is 0.01 of a percentage point.
For example, on October 28, 2026 the Bank of Canada raised its policy rate “by 25 basis points” to 2.5%. That is a rise of 0.25 percentage points from 2.25%.
At a glance
| Basis points | Percentage points |
|---|---|
| 1bp | 0.01 percentage points |
| 25bp | 0.25 percentage points |
| 50bp | 0.5 percentage points |
| 100bp | 1.00 percentage point |
Why “percentage points” and not “percent”?
If a rate goes from 2.25% to 2.5%, it rose by 0.25 percentage points. Saying it “rose 0.25%” could be read as 0.25% of 2.25%, which is a tiny amount. Rate news uses basis points or percentage points to avoid that mix-up.
How does it connect to a mortgage?
- When the policy rate rises by 25bp, banks usually adjust their prime rates. Variable-rate mortgages are priced off prime.
- If a lender says “prime minus 50bp,” it means a rate 0.5 percentage points below prime.
- Actual rates and terms differ by lender, so always check.
What the law and official sources say
Quotes are copied word for word. The "In plain words" lines are our explanation, not an official translation.
The Bank of Canada today increased its target for the overnight rate by 25 basis points to 2.5%, with the Bank Rate at 2.75% and the deposit rate at 2.45%.In plain wordsThe Bank raised its target for the overnight rate by 25 basis points to 2.5%, with the Bank Rate at 2.75% and the deposit rate at 2.45%.
Source: bankofcanada.ca/2026/10/fad-press-release-2026-10-28/ · checked Nov 4, 2026
Last week, we raised the policy interest rate by 25 basis points, bringing it to 2.5%.In plain wordsLast week the Bank raised the policy rate by 25 basis points, to 2.5%.
Source: bankofcanada.ca/2026/11/opening-statement-house-commons-standing-committee-finance-2026-11-03/ · checked Nov 4, 2026
Common questions
Does a “25bp hike” raise my mortgage rate by 0.25 percentage points right away?
A variable rate usually follows prime, so if your bank raises prime by the same amount, your rate rises by that much. A fixed rate does not change for the rest of its term. Check the actual change with your lender.
Is bp only used for interest rates?
Mostly for interest rates, bond yields and fees, where small percentage differences matter.
Guides that use this term
Sources checked
- Bank of Canada, press release of October 28, 2026 · checked Nov 4, 2026
- Bank of Canada, opening statement to the House of Commons Standing Committee on Finance (November 3, 2026) · checked Nov 4, 2026