"I remain concerned about people taking on larger obligations than they would be able to afford were interest rates to go up, as they inevitably will," Flaherty said.
"But other things are going on too. I think Canadians are increasingly getting the message that at some point interest rates are likely to rise."
Canadians, Flaherty added, are "starting to understand the risk there and that it's prudent not to overextend oneself."
That message has been an oft-repeated one, from Flaherty and Bank of Canada governor Mark Carney.
In June, Flaherty took action on Carney's worries about Canada's hot housing market and high household debt by tightening mortgage and borrowing rules yet again.
While Flaherty says it's too early to gauge the effect the new rules are having on the real estate market, he welcomed indications of a recent cooling in the condo market, particularly in Vancouver and Toronto.
"That's desirable," said Flaherty.
"It's better to have some softening in the market rather than have sudden movements."
Following even larger drops for June, the Real Estate Board of Greater Vancouver reported sales of previously owned properties dropped 18.4 per cent in July from a year earlier, while the Toronto board said sales had slipped 1.5 per cent during the same period, with condo sales falling 10 per cent.
Economists have warned that Canada's housing market is too hot, particularly the condo markets in cities like Vancouver and Toronto.
The new mortgage rules entered in force on July 9.
Among other changes, the government reduced the maximum amortization terms for mortgages backed by the Canadian Mortgage and Housing Corp. from 30 to 25 years, and limited CMHC-insured mortgages to homes of up to $1 million. CMHC insurance is warranted for deals in which buyers put less than 20 per cent down payment on a home.
Speaking Friday at a press conference on Canada's economic performance in the second quarter, Flaherty didn't signal any further moves to tighten lending rules.
The minister twice referred to the possibility of the Bank of Canada rising interest rates in the future, but didn't make any predictions as to when the hike would come.
The move is a two-edged sword because raising interest rates could lead to dampening other economic sectors.
Last month, nearly half of the respondents in a national survey said they would have difficulty keeping up with mortgage or debt payments following a significant increase in interest rates. Out of 1,000 Canadians randomly sampled via telephone, 48 per cent of them said a significant interest rake hike would pose a challenge to them.