The Reserve Bank of Australia has poured cold water on hopes banks will go it alone in 2013 and reduce lending rates without further official rate cuts.
There has been speculation in recent months that a recent slide in wholesale funding costs would give Australian banks room to cut mortgage lending rates in 2013.
But, in its quarterly Statement on Monetary Policy, released on Friday, the RBA said bank's overall funding costs were relatively unchanged, compared to late 2012.
The RBA said although the cost of unsecured and covered bonds had fallen in recent months, making it cheaper for banks to source funding though those avenues, banks were still paying higher rates for previously issued bonds.
Meanwhile, there was still strong competition among banks for cash deposits, which are used to finance shorter-term debt.
The RBA said the interest rate paid to deposit holders over the past few months had decreased roughly in line with cuts to the RBA's cash rate, which meant the cost of financing through deposits was relatively unchanged.
"The relative cost of banks' outstanding long-term wholesale debt remained stable over the period, with the large reduction in spreads for new bond issuance having only minimal effect on banks' outstanding wholesale costs at this stage," the RBA said.
"It will take some time for the reduction in spreads to flow through to overall bank funding costs owing to the relatively subdued growth in credit and the slow run-off of wholesale debt issued previously."
"The Reserve Bank is seemingly ruling out the potential for banks to be able to cut rates on their own," he said.
The RBA cut the cash rate 1.75 percentage points between November 2011 and December 2012, but kept it on hold at three per cent at its February board meeting on Tuesday.
But banks failed to pass on most of the cuts in full, citing the higher cost of borrowing following the global financial crisis.