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| One-Year CMT (Monthly) |
| By Bankrate.com |
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This week |
Month ago |
Year ago |
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One-Year CMT (Monthly)
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2.28 |
2.42 |
4.96 |
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What it means:
An index published by the Federal Reserve Board based on the monthly
average yield of a range of Treasury securities, all adjusted to the
equivalent of a one-year maturity. Yields on Treasury securities at
constant maturity are determined by the U.S. Treasury from the daily
yield curve. That is based on the closing market-bid yields on actively
traded Treasury securities in the over-the-counter market.
How it's used:
It's an index that is used to set the cost of variable-rate loans,
particularly adjustable-rate mortgages (ARMs). Lenders use such an
index, which varies, to adjust interest rates as economic conditions
change. They then add a certain number of percentage points called
a margin, which doesn't vary, to the index to establish the interest
rate you must pay. When this index goes up, interest rates on any
loans tied to it also go up. Since this index is a monthly average
of the one-year CMT yield, it is less volatile than daily interest
rate movements but more volatile than other indexes such as the 11th
District Cost of Funds.
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