The increase in the interest rate on any loan as a consequence of sturdier capital requirements for banks will be insignificant, an analysis published by the Australian Prudential Regulation Authority has found.APRA estimates the increase in the interest rate on a commercial loan will be around 10 basis points by the time the Basel III requirements are bedded down, by 2016.For a home loan, APRA estimates the costs will amount to four basis points.APRA said this increased cost could "best be summarised as 'zero to not much at all'."This is particularly the case when compared with the post-2007 incremental costs of bank funding, which likely are in the order of 150 basis points per annum. "In this context, the cost of APRA's Basel III capital increment in new lending rates is close to a rounding error."APRA based its analysis on a notional increase in the capital ratio of banks of two percentage points; a pre-tax cost of capital of 16 per cent; and a reduction in the marginal cost of funds, given the assumed increase in the soundness of banks.APRA estimates the cost to the economy as a whole as being "very small decreases, over many years, in GDP."APRA based its assessment of economy-wide costs on theoretical work undertaken by the Basel Committee on Banking Supervision.As for the benefits, APRA said these were "large" but "not easy to quantify."APRA said it was "difficult to calculate the degree to which the increase will reduce the risk of a single bank failure or of a systemic banking crisis, but it will surely generate a non-trivial increase in banking system safety."