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Prime-BA Spread

The "prime-BA spread" is simply prime rate minus the 30-day bankers’ acceptance yield. 

In raw terms, it represents gross lender margins on variable-rate mortgages.

From this spread, lenders have to pay liquidity/risk premiums (when raising lending capital in the credit markets), customer acquisition costs, overhead, salaries, etc. The remainder is profit.

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Last modified: September 26, 2009

Robert McLister is one of Canada’s best-known mortgage experts. A mortgage columnist for The Globe and Mail, interest rate analyst and editor of MortgageLogic.news, Rob has been covering Canada's mortgage market since 2007.