Many questioned the Labor government's decision in October to offer lenders the safety of Australia's credit rating but a new report suggests interest rates could be much higher if it had decided against allowing banks to sell covered bonds.
When the Commonwealth Bank and National Australia Bank raised $3.2 billion from the market last week, they paid a 1% premium - completely negating the impact of the Government guarantee. The major lenders would be more reluctant to pass on RBA cuts had the policy not been in place.
ANZ has had a similar experience to its competitors, saying that, while access to wholesale funding markets in the 2012 financial year has commenced with better momentum, funding costs for new issuance remain very elevated.
The Reserve Bank is being tipped to drop rates again when it meets next month and then all eyes will turn to the majors to see if they are going to pass on rates or succumb to temptation to spread the pain of higher funding costs.