Many households take great interest in mortgage interest rates, with debt servicing costs often a key component of weekly outgoings. An important determinant of mortgage rates, or indeed any lending rate for households or businesses, is a bank’s cost of funding. While other variables, such as the cost of equity, profit margins, and the risks associated with lending will also have a bearing on the interest rates customers are charged, the cost of funds will be a major factor. The Reserve Bank’s key monetary policy instrument is the Official Cash Rate (OCR), but ultimately the bank is interested in lending rates faced by households and businesses.