MTA
Monthly Treasury Average (1 year MTA)

This index is determined by averaging one-year Treasury bills each month over the prior 12 month time period. This is an index used to set the cost of various variable-rate loans, particularly adjustable-rate mortgages. The use of the 1-Year MTA as a loan index is relatively new. The MTA generally fluctuates more than the 11th District Cost-of-Funds Index (COFI ­ see below), although they both track each other closely.

Note:
The MTA index is often used in what is commonly referred to as “Option ARMs”. This product type can create terrific cash flow and payment stability for your customer in the early years of the loan but requires education on the consequences of the different payment options, such as negative amortization.

Summary:
The one year MTA is the most popular index for ARMs when looking for stability and low volatility. Very predictable in a one year or less outlook for you, and has a very clear track record of rising slower than other popular indexes with competitive margins.

Ideally Suited for:
This index is ideally suited for mid-level to even conservative borrowers that are short to mid-term dwellers in their home. The MTA is great in a steady but rising interest rate environment when measuring against a fixed rate. As long as the spread between current fixed rates and the fully indexed rate on the MTA is a full one percent or greater, an ARM tied to this index can be a very good strategy.

If you would like to apply for a Delaware Home Loan, you can APPLY ONLINE HERE, you can call John R. Thomas at 302-703-0727

John R. Thomas – NMLS 38783

Certified Mortgage Planner – Primary Residential Mortgage, Inc.

302-703-0727 DE Office / 610-906-3109 PA Office / 410-412-3319 MD Office

42 Reads Way, New Castle, DE 19720