The 12-Month Treasury Average (MTA or MAT) Explained:

The 12-month average of the monthly average yields of U.S. Treasury securities adjusted to a constant maturity of one year. This index is calculated by averaging the previous 12 rates of the 1 Year CMT. Because this particular index is an annual average, it is steadier than the 1-Year Treasury Index. It fluctuates more than the 11th District Cost of Funds, but its movements track each other very closely. The terms 12 MTA (12-month treasury average) and 12-MAT (12 month average treasury) are used interchangeably.

The Monthly Treasury Average is a relatively new ARM index. This index is the 12-month average of the monthly average yields of U.S. Treasury securities adjusted to a constant.

Because this index is an annual average, it is steadier than the 1-Year CMT index. The MTA index generally fluctuates slightly more than the 11th District 11th District Cost of Funds Index (COFI) although its movements track each other very closely. The MTA and COFI-indexed ARMs work much the same way.

Some mortgages, such as pay-option ARMS, offer the borrower a choice of indexes. This choice should be made with research to current market indexes and analyzing your own personal financial situation. Interest rates on an adjustable rate mortgages are known as the fully indexed interest rate, equaling the index value plus the margin. While the index is variable, the margin is fixed for the life of the mortgage.

How long and how is the 12 MTA rate calculated?

The 12 Month MTA rate is calculated as the average of the last 12-month values of the 1-Year CMT. MTA stands for 12-Month Treasury Average (MTA).

The calculation is done as follows:

12 Month MTA (May 2008) = [1-Year CMT (May 2008) + 1-Year CMT (April 2008) +...+ 1-Year CMT (June 2007)] / 12

What is the history of the 12-Month MTA?

Since the MTA is considered a fairly new index, it has been around since 1955. If you are looking for previous statistics on this MTA index, you may try the Federal Reserve Statistical Release H.15.

There are only monthly values for the MTA ARM index. Many lenders will compute the MTA values on the last business day of the month. Be wary, your lender may have a different approach to calculate the 12-Month Treasury Average MTA index and state their calculations in within mortgage literature about programs.