Canadian long-term mortgage rates jumped by at least a quarter point Friday as interest rates began to rise in the bond market because a strong U.S. jobs report suggested the American economy is recovering more quickly than expected.
CIBC was first off the mark, raising house lending rates a quarter point on three-year, five-year and longer-term mortgages. The new rates, effective Saturday, are 5.95 per cent for a five-year term and 5.35 per cent for a three-year loan.
Later, the Royal Bank (TSX: RY) raised rates across the board, from a tenth of a point on six-month open mortgages to more than a third of a point on seven- and 10-year loans.
Other big Canadian banks were also expected to push their rates higher.
Banks finance their mortgage lending in the bond market, where rates jumped Friday over investor fears a rapidly expanding U.S. economy will increase inflationary pressures.
The U.S. Labor Department reported American employers added 308,000 jobs in March, hiring at the fastest pace in four years and more than double what most economists had expected.
The jobs report added to investor expectations that the U.S. Federal Reserve Board will raise general interest rates later this year to fight infationary pressures.
In trading on the Toronto Stock Exchange on Friday, CIBC (TSX: CM) shares rose $1 to $69.25.
