The TFF, in combination with the Bank's other policy measures, is contributing to a significant reduction in the structure of interest rates in Australia. The substantial fall in banks' funding costs has been passed through to borrowers, who are benefiting from historically low rates. The most direct effect of the TFF has been to provide banks with a low-cost source of funding.
In particular, the TFF provides access to funds for 3 years at a cost that has been well below the cost of wholesale debt for the same term (Graph 2). As banks have drawn on the TFF, they have largely refrained from issuing new senior debt, so the total stock of bank bonds has declined as existing bonds have matured.