Interest Rate Sensitivity

Interest rate sensitivity means how much an asset, loan, or business is affected by changes in interest rates. In simple terms, it shows how strongly something reacts when rates move. Interest rate sensitivity is important because rising or falling rates can change borrowing costs, bond prices, stock valuations, housing demand, and company profits. Some sectors react more strongly to rates than others. For example, real estate and growth stocks can be highly sensitive to interest rates because financing costs and future earnings matter a lot. Interest rate sensitivity is not the same for all assets. Some investments may barely move when rates change, while others can react sharply.