In unusually expansive minutes from its November 5 board meeting, the Reserve Bank of Australia makes a series of observations on bank funding that qualify, and almost retract, a line of argument it used in the minutes for its September meeting. Since those earlier minutes declared, bluntly, that "banks' funding costs had been relatively flat over recent months" the banking industry has found the RBA line used repeatedly, as outsiders question the rationale for the recent rise in home loan margins.This month the RBA has more to say."Most banks had reported a small reduction in net interest margins in their most recent half-yearly accounts," the minutes note, "though some had experienced an increase. "Deposit competition appeared to have levelled off in recent months. "In debt markets, spreads on short-term bank bills had narrowed to be not far above pre-crisis levels. "Spreads on longer-term bank debt had stabilised at levels that were significantly higher than before the crisis."The minutes note that these factors were "slowly adding to the banks' cost of funds as banks rolled over debt issued earlier at lower spreads."RBA board members "noted that lending rates might increase by more than the cash rate."However, "this tendency would not be lessened by delaying a change in the cash rate. "Lending rates had been rising relative to the cash rate since the global financial crisis, and the board had taken this into account in setting the cash rate. "It would continue to take account of any changes in margins in its decisions in the period ahead," the minutes say.