Tighter mortgage rules came into effect today, but if the results of a new poll are any indication, almost half of Canadians were not aware the system was changing.

In a bid to rein in the market, Finance Minister Jim Flaherty has introduced regulations that make it tougher for Canadians to take out a loan or purchase new homes.

The changes whittle the maximum amortization period for government insured homes down to 25 years from the previous 30 years. As well, lenders have been limited to only issuing home equity loans up to a maximum of 80 per cent of a property’s value.

Though the changes shrink the pool of Canadians who are qualified to purchase a home, a poll conducted by Pollara for the Bank of Montreal found that almost half of the population (49 per cent) is unfamiliar with the new rules.

When surveyed, most Canadians were not able to rhyme off the new maximum amortization period for government insured mortgages. Only 45 per cent of respondents correctly identified the period as being 25 years.

One quarter of Canadians -- or, 26 per cent -- are still under the impression that the amortization period is 30 years, according to the BMO poll.

Though results suggested otherwise, 66 per cent of the 1,000 respondents surveyed between June 29 and July 4 claimed to be staying current with the nation’s mortgage rules.

Even with the availability of financial planners, it’s crucial for Canadians to have an understanding of the new mortgage rules, said BMO mortgage specialist Laura Parsons.

"The recent changes…will have an effect on how Canadians purchase property, so it's more important now than ever to seek clarity on the current guidelines in place,” she said in a statement released with the poll on Monday.

Diane Usher, a vice president at Royal Lepage, said while the survey suggests many Canadians were caught unaware by the changes, first-time buyers, who will be most affected, are more market-savvy than previous generations.

“They know about qualifying for mortgages, they know about property values and they do an awful lot of work on the Internet in advance of even going and looking at properties,” Usher told CTV News Channel.

Perhaps the most notable change is the reduction of the amortization period, which has been pulled down to a level it had stood at before soaring as high as 40 years in 2006.

Additional changes include:

  • Would-be homebuyers must prove they can afford mortgage payments, property taxes and heating costs on their homes. Ottawa plans to ensure this by setting the maximum gross debt service ratio -- a marker indicating how much of a person’s income can go towards housing costs -- at 39 per cent.  The maximum total debt service ratio has been fixed at 44 per cent.
  • Planning on buying a million-dollar home? Not so fast. The government will no longer insure homes worth more than $1 million. Homebuyers must come up with down payments of at least 20 per cent.

For his part, Flaherty has called the changes a way to encourage prudent behaviour.

Usher said Monday the new rules will have the greatest impact on first-time homebuyers, who will find it more difficult to qualify for a mortgage.

She said the changes will result in higher monthly mortgage payments, which will put the squeeze on buyers, but also means that “less interest is paid in the long run.”

Condominium broker Brad Lamb, president of Lamb Development Corp., suggests stricter mortgage rules will pay off in long-term benefits for the real estate market.

“Perhaps we’re gotten a little but ahead of ourselves in some marketplaces where prices have risen a bit too far too fast,” he told CTV News Channel on Monday.

“I’m not predicting any kind of bubble bursting or anything like that, but I do think we’re going to have a gradual slowdown.”

With files from The Canadian Press