MTA Index – What is it?
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.
