One-Year Constant Maturity Treasury - 1-Year CMT

AAA

DEFINITION of 'One-Year Constant Maturity Treasury - 1-Year CMT'

The interpolated one-year yield of the most recently auctioned four-, 13- and 26-week U.S. Treasury bills, plus the most recently auctioned 2-, 3-, 5- and 10-year U.S. Treasury notes as well as the most recently auctioned U.S. Treasury 30-year bond, plus the off-the-runs in the 20-year maturity range.

INVESTOPEDIA EXPLAINS 'One-Year Constant Maturity Treasury - 1-Year CMT'

The U.S. Treasury publishes the one-year CMT value on a daily basis. Official weekly, monthly and annual one-year CMT values are published respectively. The monthly one-year CMT value forms a popular mortgage index to which many fixed period or hybrid adjustable-rate mortgages (ARMs) are tied.

Some mortgages such as payment option ARMs offer the borrower a choice of indexes. This choice should be made with some analysis. Different indexes have relative values which historically are quite constant within a certain range. For example, the one-year CMT index is typically lower than the one-month LIBOR index by about 0.1% to 0.5%. When considering which index is most economical, don't forget about the margin. The lower an index relative to another index, the higher the margin is likely to be.

RELATED TERMS
  1. LIBOR

    LIBOR or ICE LIBOR (previously BBA LIBOR) is a benchmark rate ...
  2. Mortgage

    A debt instrument, secured by the collateral of specified real ...
  3. Monthly Treasury Average Index ...

    The 12-month moving average of the one-year constant maturity ...
  4. Yield

    The income return on an investment. This refers to the interest ...
  5. Adjustable-Rate Mortgage - ARM

    A type of mortgage in which the interest rate paid on the outstanding ...
  6. U.S. Treasury

    Created in 1798, the United States Department of the Treasury ...
Related Articles
  1. Insurance

    Insurance Tips For Homeowners

    Use these simple ideas to save money and get better coverage for your house.
  2. Insurance

    ARMed And Dangerous

    In a climate of rising interest rates, having an adjustable-rate mortgage can be risky.
  3. Credit & Loans

    Mortgages: Fixed-Rate Versus Adjustable-Rate

    Both of these have advantages and disadvantages depending on your financial needs and prospects.
  4. Home & Auto

    Adjustable-Rate Mortgage Indexes: Know Your Benchmark

    Understanding these benchmarks can help you select the most competitive adjustable-rate loan.
  5. Home & Auto

    Option ARMs: American Dream Or Mortgage Nightmare?

    Option adjustable rate mortgages could make or break your home-buying experience.
  6. Bonds & Fixed Income

    How do I buy treasury bills?

    Discover how Treasury Bills (T-bills) are a safe-bet investment for short-term returns. The percentages on the returns vary.
  7. Investing Basics

    CDs or Bonds: Which Investment is Better For You

    When choosing between CDs and bonds, investors who seek to maximize their returns but also want a large measure of safety should consider the following:
  8. Bonds & Fixed Income

    What is the difference between a debenture and a bond?

    Learn how to differentiate between debentures and bonds, two types of debt securities that can be issued by a government or company to raise capital.
  9. Bonds & Fixed Income

    Interested In West African Debt? Look Here First

    Promising high yields that the Eurozone and U.S. can't match, West African sovereign debt has caught the attention of savvy investors.
  10. Bonds & Fixed Income

    How long can I hold my HH/H Bonds and still earn interest?

    Take advantage of your bond investment and learn how long you can hold on to your Series H/HH Bonds and still earn interest and receive interest payments.

You May Also Like

Hot Definitions
  1. Weather Insurance

    A type of protection against a financial loss that may be incurred because of rain, snow, storms, wind, fog, undesirable ...
  2. Portfolio Turnover

    A measure of how frequently assets within a fund are bought and sold by the managers. Portfolio turnover is calculated by ...
  3. Commercial Paper

    An unsecured, short-term debt instrument issued by a corporation, typically for the financing of accounts receivable, inventories ...
  4. Federal Funds Rate

    The interest rate at which a depository institution lends funds maintained at the Federal Reserve to another depository institution ...
  5. Fixed Asset

    A long-term tangible piece of property that a firm owns and uses in the production of its income and is not expected to be ...
  6. Break-Even Analysis

    An analysis to determine the point at which revenue received equals the costs associated with receiving the revenue. Break-even ...
Trading Center