Bank funding costs "have declined a little relative to the cash rate", the Reserve Bank of Australia said in its quarterly
Statement on Monetary Policy, released on Friday.
"As conditions in wholesale funding markets have improved, interest rates on some term deposit 'specials' have been reduced, leading to a further narrowing in spreads relative to comparable term wholesale-market rates," said the Statement.
"With average interest rates on at-call deposits little changed, term deposits have become less attractive to savers than at-call deposits, which has resulted in a continued inflow of household savings into at-call deposit accounts," the RBA said.
Dispelling one misconception being fanned in some business media, the RBA noted that "the aggregate share of funding from domestic deposits has remained broadly stable."
The cost of banks' new issuance of unsecured long-term wholesale debt "has
been little changed, and remains at around its lowest level since mid-2009", the RBA said.
"The outstanding cost of wholesale debt has started to decline over the past few months as some of the debt issued in 2008 and 2009 at high spreads has matured."
"This has had a limited effect on banks' overall funding costs to date as long-term wholesale debt currently represents only 15 per cent of banks' total funding," said the RBA.