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. Indexed Rate

    An interest rate charged on loans to borrowers that is calculated ...
  5. Yield

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

    A type of mortgage in which the interest rate paid on the outstanding ...
Related Articles
  1. Insurance Tips For Homeowners
    Insurance

    Insurance Tips For Homeowners

  2. ARMed And Dangerous
    Insurance

    ARMed And Dangerous

  3. Mortgages: Fixed-Rate Versus Adjustable-Rate
    Credit & Loans

    Mortgages: Fixed-Rate Versus Adjustable-Rate

  4. Adjustable-Rate Mortgage Indexes: Know ...
    Home & Auto

    Adjustable-Rate Mortgage Indexes: Know ...

Hot Definitions
  1. Halloween Strategy

    An investment technique in which an investor sells stocks before May 1 and refrains from reinvesting in the stock market ...
  2. Halloween Massacre

    Canada's decision to tax all income trusts domiciled in Canada. In October 2006, Canada's minister of finance, Jim Flaherty, ...
  3. Zombies

    Companies that continue to operate even though they are insolvent or near bankruptcy. Zombies often become casualties to ...
  4. Witching Hour

    The last hour of stock trading between 3pm (when the bond market closes) and 4pm EST. Witching hour is typically controlled ...
  5. October Effect

    The theory that stocks tend to decline during the month of October. The October effect is considered mainly to be a psychological ...
  6. Repurchase Agreement - Repo

    A form of short-term borrowing for dealers in government securities.
Trading Center