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CMT Rate: How It Affects Your Mortgage Rate

April 18, 2024 4-minute read

Author: Scott Steinberg


The Constant Maturity Treasury (CMT) rate and U.S. Treasury play a key role in determining the mortgage interest rates that are associated with adjustable-rate mortgages (ARMs). Understanding how CMT rates can raise or lower your mortgage interest rates can help you budget more effectively.

If you plan on purchasing a new or existing home, understanding how the rates work and how they influence interest rates on ARMs is essential. Here’s what you need to know.

What Is The Constant Maturity Treasury (CMT) Rate?

Treasury securities – including U.S. Treasury bills (T-bills), Treasury notes (T-notes) and Treasury bonds (T-bonds) – are debt obligations that are backed by the federal government. Holders of these treasury securities (investors), which can be bought and sold on primary and secondary markets, receive payments in exchange for the monies that they pay to secure them.

  • T-bills: T-bills are short-term debts that mature in under a year, and they’re largely viewed as low-risk investments. The longer it takes for the T-bill to mature, the more you can expect to be paid in interest as a return on your investment.

  • T-notes: T-notes are government-secured debts with a fixed interest rate and a term of maturity that sits between 2 and 10 years. Owners of T-notes receive payments on their holdings at 6-month intervals until the note matures.

  • T-bonds: T-bonds are fixed-rate government debt securities whose maturity period ranges 10 – 30 years in length. T-bonds pay investors in the form of semiannual interest payments until these investments mature, at which time the owner of the T-bond can expect to be paid the bond’s face value.

The CMT rate refers to a computed yield that is derived by taking the average yield of different types of Treasury securities that are set to mature at different times and using it to adjust for a number of time periods. It’s typically presented to observers in the form of an index that is provided by the Federal Reserve Board to demonstrate to prospective Treasury security purchasers what kind of average yield that they can expect on investments made in these debt securities.

Perhaps the easiest way to think of the CMT rate is as a current snapshot that reveals – based on trends in currently traded securities – how much value that the ownership of different types of Treasury securities might ultimately produce if you elect to invest in them.

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Calculating The 1-Year CMT Rate

CMT rates are calculated by first determining the Treasury yield curve rate (which compares and contrasts short-term T-bill yields against long-term investments such as T-notes and T-bonds) that corresponds to any given Treasury security, then averaging the past week’s or past month’s daily rates that map to the appropriate Constant Maturity Treasury.

In other words, the CMT rate presents to viewers the current hypothetical value of the worth of a U.S. Treasury security – one that’s based on the values of U.S. Treasuries that have been recently auctioned.

When you encounter references to the CMT rate, you can expect to see these figures expressed in the form of the 1 year CMT. It’s a measure of value that is designed to illustrate the one-year yield equivalent (how much you might expect to earn in interest from these investments each year) of the most recently auctioned Treasury securities. CMT rates may also be expressed in the form of 3, 5 and 10 year equivalents.

Lenders look to these calculations when they set and adjust home mortgage interest rates on variable-rate loans and other adjustable-rate loan products as economic conditions shift. If CMT rates change, the amount of interest that you pay each month and over the lifetime of your home loan can change as well.

Understanding how CMT rates impact your mortgage interest rate can help you better decide if buying or refinancing your home is right for your needs.

Take the first step toward the right mortgage.

Apply online for expert recommendations with real interest rates and payments.

How The CMT Index Affects Mortgage Rates

Think of the CMT Index as a reference point that financial lenders (banks, credit unions, online lenders, etc.) look to as they set the cost of variable-rate loans, such as adjustable-rate mortgages. As market conditions change, lenders adjust the interest rates charged on these home mortgage products.

Variable-rate lenders will first determine a mortgage interest rate based on CMT, then add additional percentage points (their margin) to determine how much borrowers will ultimately pay for the loan. Your individual risk profile, credit history and other factors may also impact the mortgage interest rate available to you. As a general rule of thumb, though, when the CMT index goes up, any loans that are tied to it – ARMs and other variable-rate products – tend to increase their interest rates as well.

As you consider whether to use CMT rates or other benchmarks to make an informed mortgage or refinance decision, you’ll want to consider countrywide economic factors, the global geopolitical environment, the current state of the real estate and housing industry, and any other considerations that may impact the market’s current and future operating outlook.

The Bottom Line: Look At CMT Rates Today Before Signing An ARM

CMT rates can have a marked effect on adjustable-rate mortgages and other variable-rate home loan products, making the CMT rate a factor that you should be aware of before applying for a mortgage.

As CMT rates rise, so too can mortgage interest rates, and the higher the interest rates are, the more you can expect to pay each month.

Your mortgage interest rates aren’t subject solely to the U.S. Treasury yields. Once you’ve learned about how lenders calculate mortgage interest rates and what factors influence your loan payments, take action and start your mortgage application online with the Home Loan Experts at Rocket Mortgage®.

Take the first step toward the right mortgage.

Apply online for expert recommendations with real interest rates and payments.

Scott Steinberg Headshot

Scott Steinberg

Hailed as The Master of Innovation by Fortune magazine, and World’s Leading Business Strategist, award-winning professional speaker Scott Steinberg is among today’s best-known trends experts and futurists. A strategic adviser to four-star generals and a who’s-who of Fortune 500s, he’s the bestselling author of 14 books including Make Change Work for You and FAST >> FORWARD. The CEO of BIZDEV: The Intl. Association for Business Development and Strategic Planning™, his website is