The value of servicing assets or liabilities is highly interest-rate sensitive due to the relationship between interest rates and expected prepayments (i.e., loan refinancing). This is because when a loan is refinanced the servicing fees and other benefits of servicing cease, making the value of these assets extremely volatile.
The value of managing assets or liabilities is highly sensitive to interest rate changes due to the relationship between interest rates and expected prepayments (i.e., refinancing loans). When a loan is refinanced, the fees and other benefits associated with servicing cease, making the value of these assets extremely volatile.