ARM - Loan Margin

Loan Margin is the difference between the mortgage loan rate and its underlying index (on which the note rate is based).

For example, a mortgage interest rate may be specified in the loan note as being MTA plus 2%, 2% being the margin and MTA being the index. 

Note: All adjustable rate mortgages tie their interest rate to an index. Some common indices are:

  • 11th District Cost of Funds Index (COFI)
  • London Interbank Offered Rate (LIBOR)
  • 12-month Treasury Average Index (MTA)
  • Constant Maturity Treasury (CMT)
  • National Average Contract Mortgage Rate