BMO raises 5-year fixed mortgage rates

The Bank of Montreal says it is raising its fixed and variable home mortgage rates by 0.1 percentage points, effective Tuesday.

The bank says the posted rate for a five-year fixed closed mortgage will be 5.44 per cent, while the posted five-year closed variable rate will be 3.1 per cent.

The increase comes as long term interest rates on the bond market tick higher in anticipation that the U.S. Federal Reserve will soon start tapering its $85 billion US a month in bond purchases.

The Fed has said it is waiting for a recovery in employment and optimistic job numbers posted Friday seemed to be a sign it could move to reduce the stimulus plan.

Interest rates and home mortgage rates have been near historic lows for several years. Rates inched upwards in June and August of this year as Canadian bond yields rose.

Low rates have been a key driver for the Canadian housing market, which many analysts believe is overvalued.