Question:

What are MTA, COFI, CODI, COSI, LIBOR, CMT and T-Bill?

Answer:

MTA, COFI, CODI, COSI, LIBOR, CMT and T-Bill are the most popular ARM indexes. Adjustable rate loans are tied to an economical index that can rise or fall, change faster or slower.

MTA, COFI, CODI, COSI, LIBOR, CMT and T-Bill are abbreviations of the following:

  • 12-Month Treasury Average (MTA or MAT)
  • 11th District Cost of Funds Index (COFI)
  • Certificate of Deposit Index (CODI)
  • Cost of Savings Index (COSI)
  • London Inter Bank Offering Rates (LIBOR)
  • Constant Maturity Treasury (CMT or TCM)
  • Treasury Bill (T-Bill)

Libor, COFI and CMT account for more than 75% of all ARM loans. Even though there are no better or worse ARM indexes, they all have slightly different features. Some ARM indexes are more volatile, others are more stable. Also, some have lower values, and other are significantly higher.

However, the difference of MTA, COFI, CODI, COSI, LIBOR, CMT and T-Bill properties are compensated by lenders who use lower margins on higher value indexes, and higher margins on lower indexes. Borrowers, on the other hand, should be informed that lagging indexes as COFI are great when rates are rising. Volatile CMT indexes are best for borrowers when market rates are declining because the ARM rates are affected more quickly.

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