The policy rate and your borrowing power in Chomedey, 2026
When the Bank of Canada moves its policy rate, your borrowing power moves with it — sometimes by tens of thousands of dollars. Here is the mechanism, with numbers, and a calculator to see it live.
Quick answer
In short: each percentage-point increase in the policy rate cuts your borrowing power by about 10%. You qualify at a higher rate (the stress test), and your GDS/TDS debt ratios (≈ 39% / 44%) cap the amount a lender will approve.
For a buyer in Chomedey — where the median single-family home in Chomedey was $628,500 in Q1 2026 — every rate increase trims the purchase budget accordingly. See also Financing a home in Chomedey and the verified experts in Laval.
How the policy rate reaches your mortgage
The Bank of Canada's policy rate sets the cost at which banks fund themselves. It flows almost immediately into variable rates and the prime rate, and influences fixed rates through the bond market. In practice: when the rate rises, your monthly payment for the same amount borrowed goes up — so, at equal income, the maximum a bank will lend you falls.
The rule of thumb most lenders use: each percentage-point increase cuts your borrowing power by about 10%. On a file qualifying for $500,000, one point more is nearly $50,000 of buying power gone. Rarely trivial.
Interactive tool
Your monthly payment by rate
See the effect of a rate change on your monthly payment. Instant result.
Standard amortization calculation, for guidance only. It excludes mortgage insurance, taxes and qualification ratios. For your real borrowing power, have your file assessed by a broker.
The stress test: qualifying higher than your rate
For several years now, you do not qualify at the rate you get, but at a higher qualifying rate — the greater of a regulatory floor and your contract rate plus about two points. This "stress test" protects your ability to pay if rates rise at renewal. The practical consequence: even with an excellent rate, your maximum amount is calculated as if you paid more. Always confirm the qualifying rate in force at the time of your application.
Your two debt ratios
The bank looks at two figures. GDS (gross debt service): your housing costs — mortgage, property taxes, heating, share of condo fees — divided by your gross income. TDS (total debt service): the same, plus all your other debts (car, cards, loans). The usual thresholds are around 39% and 44%. Knowing these numbers before you shop avoids bad surprises — and a mortgage broker can optimize them by choosing the right lender and structure.
Frequently asked questions
How much does the policy rate change my borrowing power?
As a rough rule, each percentage-point increase cuts your borrowing power by about 10%. On a file qualifying for $500,000, that's close to $50,000 less.
What is the mortgage stress test?
It requires you to qualify at a rate higher than the one you get (the greater of a regulatory floor and your rate + about 2%), to protect your ability to pay if rates rise.
What are the GDS and TDS ratios?
GDS measures your housing costs against your gross income; TDS adds all your other debts. Common thresholds are about 39% (GDS) and 44% (TDS).
Fixed or variable when rates move?
Variable follows the policy rate and carries a lower break penalty; fixed secures your payment. The right choice depends on your risk tolerance and horizon.
