The Reserve Bank of Australia (RBA) took a detailed look at this in its ever-enlightening Bulletin this week.
The funding composition of Aussie banks is made up of liabilities, comprised predominantly of domestic deposits which today make up a greater share of total funding than was the case prior to the financial crisis.
While the official cash rate acts as an important "anchor" for bank funding costs, changes in the returns or compensation demanded by investors to hold debt can also influence banks' funding costs appreciably.
From yonder Bulletin, a chart of said debt funding costs once more, depicting the large decline in debt funding costs since 2008.
In respect of wholesale funding, the volume of bank bond issuance in the last calendar year was pretty much in line with the year which preceded it, though banks issued a bit less in covered bonds and residential mortgage-backed securities (RMBS).
This gradually flowed through to outstanding wholesale funding costs as the new cheaper debt replaced higher cost funding reaching maturity.
Despite a moderate increase in debt funding costs recently and a range of equity raisings, funding costs are still lower than they were.
With global interest rates so low, futures markets still expect the cash rate in Australia to be cut again by November this year, although banks may elect to retain a portion of any 25bps cut delivered in order to shore up their balance sheets further.
Alternatively banks may looking at increasing mortgage rates a little via out of cycle hikes.
Everything up overnight: stock markets up, gold up $28, oil up 4.5 per cent, iron ore spot up by more than 5.5 per cent. Iron ore May 2016 futures contracts have soared by nealy 6 per cent overnight too, which could result in some interesting price action tonight.
The Aussie dollar was also up, and it hit a 14 month high against the British pound.