There is not a significant difference between the cost of guaranteed and non-guaranteed debt once you include the 70 basis point guarantee fee. So removing the guarantee should not impact funding costs. However, the GFC has significantly increased the cost for banks for borrowing money from say 20 basis points over BBSW to 130 basis points over BBSW for three year debt. The crisis also was a wake up call on liquidity risk. This has meant that banks have made a concerted effort to raise retail deposits. As a result, deposit margins have blown out which is good for customers. Mortgage and business loan margins have also blown out which is bad for customers.
