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Royal Bank, CIBC raise mortgage rates after bond rates increase

By The Canadian Press  | October 07, 2011
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The Royal Bank of Canada sign is shown in Toronto's financial district in downtown Toronto in this Feb. 26, 2009 file photo. THE CANADIAN PRESS/Nathan Denette
The Royal Bank of Canada sign is shown in Toronto's financial district in downtown Toronto in this Feb. 26, 2009 file photo. THE CANADIAN PRESS/Nathan Denette

TORONTO - Mortgage rates are on the rise in Canada after a strong U.S. jobs growth report bumped up the cost of borrowing in the bond market.

Royal Bank says it is raising rates on some variable rates as well as five-year fixed mortgages by a tenth of a point.

The changes are effective next Tuesday, the day after Thanksgiving.

A five-year closed rate rises to 5.29 per cent at Canada's biggest bank.

Variable rate loans also generally rose, while some rates fell at the Royal.

Meanwhile, CIBC also bumped up five-year rates a tenth of a point to 5.29 per cent.

Earlier Friday, rates in the bond market rose after the U.S. Labor Department reported employers added 103,000 jobs last month.

That was double what economists had expected, but the U.S. jobless rate remained at 9.1 per cent/

Rates rose as the better than expected report soothed investor fears that the U.S. could be entering another recession.

Borrowing costs usually drop when the economy weakens so any prospects of growth puts rising pressure on rates in the bond market.

That's where banks finance their mortgage lending.

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