What Is the CMT Rate?

What Is the CMT Rate?

The CMT rate often sets the tone for rates on adjustable-rate mortgages (ARMs). It's based on the average yields of various U.S. Treasury securities. These securities are grouped together by maturity term—such as one, three or five years—and assigned an average yield. As a result, each grouping has its own CMT rate.

When we talk about yields, we're referring to the annual rate of return you'd get if you held one of these securities until it matured. Let's start by breaking down what these government-backed debt securities are:

• Treasury bills: T-bills are short-term bonds that have fixed interest rates and terms that range from four weeks to one year. Interest is paid when the bill matures.
• Treasury notes: T-notes are available in two-, three-, five-, seven- or 10-year terms. Treasury notes have a fixed interest rate that's paid every six months.
• Treasury bonds: T-bonds are long-term securities with fixed interest rates. The term can last 20 or 30 years, with interest paid every six months.

The Federal Reserve Board tracks this information and provides an average CMT rate based on common term lengths.

Learn more: Common Types of Adjustable-Rate Mortgages

How Are CMT Rates Calculated?

The U.S. Treasury securities mentioned above are sold to investors at auction. To calculate CMT rates, the U.S. Treasury looks at closing bid market prices and determines the average yield for securities of various term lengths. For this reason, rates are continuously in flux.

As of June 5, 2025, the CMT rate for a 10-year Treasury security was 4.40%, up from 3.63% nine months earlier. This is important to note because CMT rate fluctuations can directly affect how much homeowners pay for ARMs.

How the CMT Rate Affects Your Mortgage

CMT rates may be relevant if your home loan is structured as an ARM. Here's a quick overview of how these types of mortgages work:

• ARMs typically offer an introductory fixed-rate period that may last five, seven or 10 years. You can expect a lower-than-average interest rate during this time.
• When this period ends, your rate will be recalculated periodically—usually annually or every six months. That means your monthly payment can bounce up and down based on how your rate changes.

Mortgage lenders that offer ARMs generally refer to a benchmark index such as the CMT rate or U.S. prime rate when determining their rates. They also tack on additional percentage points based on their ARM margin. This amount is fixed and should be outlined in your loan agreement.

Just keep in mind that every mortgage lender is different. One may use the one-year CMT rate while another relies on the 10-year CMT rate. ARM margins can also vary from one lender and loan to the next. Either way, it's safe to assume that your mortgage rate will move in the same general direction as its corresponding index rate. This is important for your budget as it could result in a much higher (or lower) monthly payment.

Can a Fixed-Rate Mortgage Payment Change?

With a fixed-rate mortgage, your interest rate will remain the same for the entirety of the loan term. Your monthly payment shouldn't change, though it could if:

• Your property taxes, homeowners insurance premiums or mortgage insurance premiums change.
• You refinance your mortgage.

Learn more: What's the Difference Between Fixed-Rate and Adjustable-Rate Mortgages?

The Bottom Line

Only you can decide if an ARM is right for you. If you do opt for an adjustable-rate mortgage, know that the CMT rate could affect your mortgage rate—and how much you ultimately pay for your home loan. While you can't control economic conditions or rate trends, you can do your research to decide which type of mortgage is most compatible with your finances and goals.

No matter which type of mortgage you choose, your credit health will be an important factor that mortgage lenders consider. A stronger credit score could open the door for better rates and loan terms. You can check your credit report and FICO^® Score^Θ for free from Experian.