Today the Reserve Bank decided to leave interest unchanged at the record low of 1.5 per cent.

Very few, if any economists, were expecting the bank to do anything different.

"The Reserve Bank is between a rock and a hard place," AMP Capital's chief economist Shane Oliver said.

He's right. If the Reserve Bank lowered interest rates most believe the banks wouldn't pass that on to borrowers. It would also give the bank less firepower should a real crisis come along.

And if the Reserve Bank raised rates to help prepare borrowers for future, steeper rate rises, as some have suggested recently, it risks stalling economic growth.

That's because, despite robust infrastructure spending, stronger business investment and a particularly healthy export sector, it's the consumer that's causing anxiety among policymakers.

Record low wage growth, combined with the higher cost of living and job insecurity, mean households are unlikely to be able to push the economy along once the aforementioned growth drivers fade away.

Of course, that's without even talking about sliding house prices in Sydney, Perth and Darwin. It's understood that tighter banking regulations, along with political and social pressure from the banking royal commission, will ultimately see banks tighten credit further.

I'll give it to you straight: that wouldn't be good for the economy. In the current climate, a vicious cycle of falling house prices, tighter credit and reduced wealth among households would be a serious drag on economic growth.

But wait, there's more

Australia's banks are finding it harder to fund the very loans we purchase to buy houses (mortgages).

For those after a bit of finance jargon, it's known as the short-term money market.

Banks get the money they then loan to you from three main sources: deposits (60 per cent); short-term money markets (15-20 per cent) and longer-term offshore markets (15-20 per cent).

There's little upward pressure on bank deposit rates at present because they're largely dependent on Reserve Bank decisions.

Fortunately, longer term rates have actually come down recently. You can thank a brief political crisis in Italy for that. The benchmark rate banks look to in this market is the 10-year US Treasury bond. It's fallen back, comfortably under 3 per cent now.

However, and that's a big however, the interest rates on short-term money market funds have gone up. For those interested, these rates are known as the Bank Bill Swap Rate (BBSW) or the LIBOR rates, etc.

They've gone up quite a bit as it turns out. Over the last month, for example, there's been a 40 basis points, or 0.4 per cent, increase in rates.

That's the equivalent of almost two standard rate rises by the Reserve Bank.

Will the big four banks pass that on?

Well the regional banks, including the Bank of Queensland, already have.

The reason they've moved, and not the big four, is because they don't have the same access to that longer term funding that the big four banks have, which, as mentioned above, has come back a bit recently.

But, as America's equivalent of the Reserve Bank, the US Federal Reserve, gets going on its rate hiking cycle, that longer term 10-year Treasury bond rate will be bumped higher too.

There's another threat from America as well. The Trump administration has asked many major US companies to pull out from offshore investments, including in Australia. It's part of its tax policy.

Companies like Google and Microsoft have been active in buying bonds from the short-term money market. That is, injecting money into the market banks use to fund Australian mortgages.

That was in fact reason behind the initial spike in rates in the short-term money market earlier this year. Why? Well there were less funds available, because America companies withdrew their money, therefore the remaining pool of funds became more sought after and hence more expensive.

The expectation is that this will remain a short-to-medium term pressure forcing rates higher.

So there you have it, that's a really long winded way of explaining why the interest rate you pay on your mortgage could be about to go higher.

Banks' funding costs are increasing, and they're likely to pass that cost onto you. How likely?

"I think there's a very high chance of that," Dr Shane Oliver said.

If you're on the edge of your mortgage repayments though, take heart.

Mr Oliver argued the big four banks will wait until they absolutely have to move on rates, considering the current social and political heat they're already facing from the banking royal commission.

In addition, both Mr Oliver and Queensland Investment Corporation's Katrina King, pointed out that banks don't have to target standard variable mortgage rate hikes to cover the cost of higher funding charges. Instead, what they may do is raise the interest rate on interest-only loans and investor loans.

Wouldn't it be neat if one of the outcomes of the banking royal commission was that it resulted in some mortgage relief for households, when, in an alternative universe, households would have been slugged, right at the worst possible time.

I guess it's why we have these public trials.