In this context, recent research has highlighted the fact that even small changes in policy rates can have non-negligible implications for financial institutions, which tend to systematically finance illiquid long-term assets through short-term borrowing.
The average rate on variable rate housing loans has increased by around 110 basis points relative to the cash rate since mid 2007 (Graph 7). 9 This increase, relative to the cash rate, is below the  7  See Debelle G (2009), “Whither Securitisation?”, speech given to the Australian Securitisation Conference 2009, Sydney 18 November.