To understand what the CMT or Constant Maturity Treasury is we first need to understand what Treasury securities are. Treasury securities fall into three main categories: Bills, Notes and Bonds. T-Bills or Treasury bills are short term obligations under one year. T-notes carry a maturity from two to ten years. T-Bonds range from ten to thirty years in duration. The CMT rate refers to a computed yield that is derived by taking the average yield of these different types of Treasury securities that are set to mature at different times and using it to adjust for a number of time periods. The CMT is commonly used as the index for mortgage products such as FHA or VA 5 year ARMs. The CMT is published by the US Treasury as a weekly, monthly and one year rate. These are also used as a reference for pricing debt securities issued by corporations and institutions. I’m Stewart Brown, a licensed Mortgage Loan Originator in Palm Springs, California here to simply topics in Real Estate and Mortgage Lending. Please, like, share, follow and subscribe!
