Say that a few months ago you were qualified for a floating rate mortgage using the 3-yr rate of 3.3%. I'm told that was standard.
What changes now?
If you get a term less than 5 years, you have to qualify at the five year POSTED rate. Let's take RBC's new 6.1% as the example there.
If you get a term of five years +, you can use the contract rate. Let's use PC Financial's 4.4% as the example here. (Is this as low as you can get for a discounted 5 year rate? I don't know.)
We'll max out these guys to 420 periods (35 years) because that's fun.
We'll say that you can spend 40% of your Gross Income on your mortgage + taxes/insurance, and set taxes/insurance at $500.
We'll take household income as 100K.
Your max loan at 3.3% is 707,875. With 5% down, you can bid $745,131.
Your max loan at 4.4% is 610,405. With 5% down, you can bid $642,532.
Your max loan at 6.1% is 496,342. With 5% down, you can bid $522,466.
The drop in purchasing power if you stay with the floating rate is 29.9%, as you have to qualify using 6.1% instead of 3.3%.
The drop in purchasing power if you move to a 5-yr fixed is 13.8%, as you now have to qualify at 4.4% not 3.3%.