Canada‘s big banks raised long-term mortgage rates by more than a quarter of a percentage point Thursday.

The Royal Bank, the Bank of Montreal, CIBC, TD Canada Trust and National Banks all announced rates on two-year to 10-year mortgages would increase, effective Friday.

A two-year closed mortgage at CIBC jumps a quarter point to 4.8 per cent, while a five-year term increases nearly one-third of a point to 6.25 per cent and a 10-year term increases by one-fifth of a point to 7.95 per cent.

At the Royal, a two-year closed mortgage rises one-quarter point to five per cent and a 10-year term increases by four-tenths of a point to 8.15 per cent.

BMO will increase two-year closed mortgages by 0.15 of a percentage point to 4.8 per cent, and 10-year mortgages by one-fifth of a point to 7.9 per cent.

At TD Canada Trust two-year closed mortgages will jump by one-fifth of a point to 4.9 per cent and 10-year mortgages increased almost one-third of a point to 7.9 per cent.

At National, a five-year term rises a quarter point to 5.95 per cent.

The rate hikes are the second in the last two weeks as interest rates rise in the bond market, where banks finance their mortgage lending. With the U.S. economy beginning to recover, most investors expect the U.S. Federal Reserve Board to begin raising general interest rates by this fall.

In Canada, however, rates have been falling because the Canadian economy is growing more slowly than its U.S. counterpart.

© The Vancouver Sun 2004