Repricing Opportunity

DEFINITION of 'Repricing Opportunity'

The change in interest rate of an interest-sensitive asset or liability. Banks earn income from interest, so their income fluctuates with changes in interest rates. A bank can minimize its interest-rate risk and maximize its net interest income by minimizing the differences in repricing opportunities between its assets, such as adjustable-rate mortgages, and its liabilities, such as the rate of interest it pays on customer deposits or certificates of deposit.

BREAKING DOWN 'Repricing Opportunity'

Depending on the mix of assets and liabilities it holds, repricing opportunities can make a bank either asset-sensitive or liability-sensitive. Banks also experience other types of risk, including: foreign currency exchange rate risk, commodity price risk and trading investment portfolio risk.

RELATED TERMS
  1. Interest Sensitive Assets

    Assets held by a bank that are vulnerable to changes in interest ...
  2. Interest Rate Sensitivity

    A measure of how much the price of a fixed-income asset will ...
  3. Interest Sensitive Liabilities

    Any type of short-term deposit held by a bank that pays a variable ...
  4. Variable Interest Rate

    An interest rate on a loan or security that fluctuates over time, ...
  5. Finance

    The science that describes the management, creation and study ...
  6. Interest Rate

    The amount charged, expressed as a percentage of principal, by ...
Related Articles
  1. Investing

    Earnings: Quality Means Everything

    It's quantity that generates all the hype, but there are more meaningful factors that gauge true performance.
  2. Options & Futures

    Managing Interest Rate Risk

    Learn which tools you need to manage the risk that comes with changing rates.
  3. Economics

    Forces Behind Interest Rates

    Get a deeper understanding of the importance of interest rates and what makes them change.
  4. Investing Basics

    Interest Rates And Your Bond Investments

    By understanding the factors that influence interest rates, you can learn to anticipate their movement and profit from it.
  5. Options & Futures

    Immunization Inoculates Against Interest Rate Risk

    Big-money investors can hedge against bond portfolio losses caused by rate fluctuations.
  6. Home & Auto

    Where Rents Are Rising Most (Or Not So Much)

    If you’re in the market for rental housing, rents are rising more slowly in major metro areas; secondary-market rents, however, are growing faster.
  7. Home & Auto

    5 Reasons Not to Use Your Home Equity Line of Credit

    Find out why taking a loan from a home equity line of credit may be a bad idea, and why you should consider alternatives.
  8. Mutual Funds & ETFs

    Trends in Capital Flows: U.S. Equities

    Analyze asset flow data for U.S. equity mutual funds and ETFs from 2014 and 2015 to identify changes in demand, investor sentiment and outlook.
  9. Credit & Loans

    Mortgage Refinance: Brick-and-Mortar vs. Online Lender

    Understand why refinancing your mortgage might benefit you, and compare using an online lender to working with a brick-and-mortar bank.
  10. Mutual Funds & ETFs

    iShares U.S. Construction vs. SPDR Homebuilders: Comparing Homebuilder ETFs (ITB, XHB)

    Learn why the U.S. housing sector may soon take off in 2016, and discover how to easily gain exposure to the sector, through these two exchange traded funds.
RELATED FAQS
  1. What is the 1003 mortgage application form?

    Learn about the 1003 mortgage application form, what information it requires and why this form is the industry standard for ... Read Answer >>
  2. How can I budget for both short-term expenses and long-term goals?

    The first step in planning for long-term goals is actually determining how much you spend on short-term expenses. Once you ... Read Answer >>
  3. What's the difference between short sales and foreclosures?

    Understand the difference between a short sale and a foreclosure; both result in the loss of a home, either through a sale ... Read Answer >>
  4. How do you use the FNMA selling guide?

    Learn about Fannie Mae Selling Guide and find out details about how its parts provide support to the business relationship ... Read Answer >>
  5. What is a good debt ratio, and what is a bad debt ratio?

    Learn about the factors that influence how investors and lenders evaluate the debt ratio for a company and why the answer ... Read Answer >>
  6. What is the 50/20/30 budget rule?

    Learn about Elizabeth Warren's 50/30/20 budget rule, a simple and effective plan for personal money management and wealth ... Read Answer >>
Hot Definitions
  1. Keynesian Economics

    An economic theory of total spending in the economy and its effects on output and inflation. Keynesian economics was developed ...
  2. Society for Worldwide Interbank Financial Telecommunications ...

    A member-owned cooperative that provides safe and secure financial transactions for its members. Established in 1973, the ...
  3. Generally Accepted Accounting Principles - GAAP

    The common set of accounting principles, standards and procedures that companies use to compile their financial statements. ...
  4. DuPont Analysis

    A method of performance measurement that was started by the DuPont Corporation in the 1920s. With this method, assets are ...
  5. Call Option

    An agreement that gives an investor the right (but not the obligation) to buy a stock, bond, commodity, or other instrument ...
  6. Economies Of Scale

    Economies of scale is the cost advantage that arises with increased output of a product. Economies of scale arise because ...
Trading Center