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While Finance Minister Jim Flaherty is hoping his recent tightening of mortgage rules will apply the brakes to hot real estate markets, a new survey by Bank of Montreal shows that many Canadians are simply not paying attention.
Nearly half of those surveyed by BMO say they are unfamiliar with the new mortgage rules.
Most Canadians could not say what the maximum amortization period -- the amount of time it will take to pay off a mortgage -- was for government-backed mortgages. Only 45 percent of those asked identified it correctly as 25 years.
More than a quarter of those surveyed still thought the maximum amortization period was 30 years.
Yet 66 percent of those surveyed claimed they were up to date on the latest mortgage rules.
The survey comes after Flaherty last month announced a number of changes to government-backed mortgages. The changes kick in on July 9.
The new regulations shorten the maximum mortgage amortization period to 25 years from 30 years and lower the amount homeowners can borrow against their house to 80 percent from 85 percent. They also limited taxpayer-backed mortgage insurance to homes that sell for less than $1 million and capped the gross debt service ratio of a mortgage to 39 percent and the maximum total debt service ratio to 44 percent.
The rule changes come after many economists have warned that the country’s real estate market is set for a pull back after years of climbing prices and growing consumer debt levels.
And while Canadians may be hazy on the actual details of the tighter mortgage regulations, they admitted the tougher rules will deter some of them from jumping into the housing market.
Fourteen percent of respondents say the latest changes make it less likely they will buy a new home in the next five years, while 41 percent say they will likely spend less on a new home than they would have otherwise.
And nearly half of those surveyed say the rules make it more likely they will take out a smaller mortgage.