Work out marginal cost of funds instantly with clear inputs, formula shown and shareable results.
Lending should be priced off the marginal cost of raising the next unit of funding, not the average cost of the existing book. Adding operating cost to the weighted funding rate gives the floor below which new lending destroys value.
Marginal cost of funds
Marginal cost = deposit rate × weight + borrowing rate × (1 - weight) + operating cost
Figures are estimates based on the inputs given. Bank charges, regulatory minima and market rates change and differ between institutions and jurisdictions. This is not financial advice — confirm with your bank or treasury policy.
Because the existing book is already funded. New lending must be paid for at today's rates.
Yes. Shifting funding from deposits to market borrowing raises the marginal cost and should feed straight into pricing.