Potential borrowers face an increase of 1.5 percentage points in the cost of bank loans.

The price of a five-year loan rose by 174 basis points above short-term money markets rates in June. The figure is far above the pre-global financial crisis increase of 17 basis points in the middle of 2007.

Banks and financial lending institutions were able to raise the much needed financing to offset the rising cost of replacing cheap pre-global financial crisis debt with much more expensive borrowings. The success lay in raising the interest rates on long-term deposits.

The Australian and New Zealand Banking Group (ASX: ANZ) offered the lowest interest rate for five-year deposits. Its 6.5 percent rate is less attractive than Westpac Banking Corporation's (ASX: WBC) 7 percent. The Commonwealth Bank of Australia (ASX: CBA) and National Australia Bank (ASX: NAB) are offered 6.75 percent for customers to lock up their money for a five year period.

The CBA held $26 billion in deposits in the 2009 – 2010 financial year. The deposits closely matched the $28 billion raised in new long-term debt funding during the same period.

The attractive deposit interest rates need to be paid off later on so banks have struck a balance through raising lending rates.