TD rates can't go higher: Westpac

That means their mix of retail and wholesale funding is likely to change only marginally, they say.

The banks currently source about 45% of their funding from retail deposits with the balance sourced from wholesale markets and a significant portion coming from overseas.

The global financial crisis has made it more difficult and more expensive to raise funds on wholesale markets and recent Reserve Bank regulations also make retail funds significantly more attractive to banks than wholesale funds, the economists say.

"Consequently, banks have begun to compete more fiercely for retail deposits and this has driven up the interest rate paid on term deposits," they say.