What are 'Interest Sensitive Assets'

Interest sensitive assets are assets held by a bank that are vulnerable to changes in interest rates. This change can occur either when the asset matures or when it is repriced according to an index rate. The value of these assets is adjusted according to the rise or fall of a published rate or index

BREAKING DOWN 'Interest Sensitive Assets'

There are several types of interest sensitive assets such as adjustable rate mortgages (ARMs) and variable rate consumer and demand loans. The benchmarks that their pricing adjustments are tied to can include the 6-month T-Bill rate, the LIBOR and the prime rate. The sensitivity of these assets to interest rate changes can negatively affect the customers more than the bank itself.

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