The interest expense that banks are paying for retail funds isnow the lowest on record, according to research firm Market RatesInsight.

In 2011, banks paid an average of 16 cents in interest expenseon deposits for every $1 they earned in interest on loans, MRIsaid. In 2007, prior to the last recession, banks paid an average of 51 cents in interest expense ondeposits for every $1 they earned as interest on loans.

Total interest income from loans at FDIC-insured institutions in2007 was $725 billion and total interest expense paid for depositsamounted to $372 billion, which is a cost of 51 cents in interestpaid for every $1 of interest earned, according to MRI in SanAnselmo, Calif.

In 2011, total interest income was $507 billion and totalinterest expense paid for deposits amounted to $84 billion, whichis a cost of 16 cents in interest paid for every $1 of interestearned, the data showed. That 16 cents is the lowest since the FDICmade such figures available in 1992, the firm said.

Dan Geller, executive vice president at MRI, said one reasonwhy banks can offer historically low rates on mortgages andpersonal loans is because of their historically low cost offunds.