Westpac might be preparing its customers for a further widening in margins on home loans.Rob Coombe, group executive, retail and business banking, at a speech in Sydney yesterday, said that the price of funding for the major Australian banks remained high despite financial market conditions easing.He said the rising costs could prompt the banks to increase lending rates outside of the central bank's official cycle. (Banks also have an opportunity to widen margins if the RBA lifts the cash rate next week as expected).Coombe drew a link with the structural shift in investment flows generated by the compulsory superannuation system, which he argued means "that Australian banks will always need to raise money offshore and as a result of the repricing up of risk will incur higher costs than we have in the past."This means while we are exporters of investment capital, we need to go offshore so we can meet the borrowing needs of Australians."This all means that the Australian banks have repriced credit over and above the official movement in official cash rates since the beginning of 2008 and will inevitably to do more."Coombe's approach is consistent with the talk out of middle management ranks at Westpac that senior management is likely to lift margins on home loans.Westpac took the pricing lead on home loans in late 2009 when it added 20 basis points to its home loan margin, a step copied by some but not all banks.Coombe was speaking at the American Chamber of Commerce. The Australian reported his speech today.