Rates going up? Rates going down? Who really knows.

Truth be told it depends on the day.

Anyone who has a mortgage is eagerly awaiting the green light that the banks have finally started to reduce variable rates.

However, for those of you who may have tried to refinance in recent times, we are currently in somewhat of a holding pattern with variable rates. We have actually been in this holding pattern for some time. Since we finally hit the last cash rate and then interest rate rise, variable rates have appeared to be 'stuck'. The banks are largely matching that same pause in the cash rate by the RBA, by not adjusting variable rates for the majority of home loan customers. Thankfully not moving upwards, but on the whole, not moving downwards..... yet.

With each release of economic news on any given day, the headlines will flash 'rate relief on the way for struggling Aussies' or 'Watch out, another rate rise is coming''. It is enough to set many nerves on edge.

Let's get back to the facts that we know for sure.

1. The RBA wants inflation to be lower than it is now

2. The RBA has however paused its aggressive increase in the cash rate for the last two months based on economic data for the previous months

3. Home loan variable rates have largely remained unchanged since the last rate rise especially for existing customers

4. The RBA's decision whether to increase, decrease or continue to hold the cash rate will be directly determined by the information that comes to hand over time.

This is why on some days, a good economic report may give rise to hopes of a cash rate decrease which will likely lead to a drop in bank interest rates. The following week, a less glowing economic revelation may dispel this hope just as quickly as we began to revel in it.

However, there will come a time where there is enough economic data about inflation that will please the RBA enough to decide to lower the official cash rate.

Based on what we know so far, it is 'predicted' that this will be in the new year. The majority of banks will likely follow suit. And that may well be when the fun and games begin. Competition which has largely been lacking between the banks on interest rates in recent times, may finally come into play as banks start to again compete on price to chase you as a customer.

Bring it on I hear you say.

In the meantime, it would be important to keep a level head. Avoid interpreting a 'news headline' to spell disaster without finding out the facts behind the story. Be informed, but not overwhelmed or heavily swayed by something you read.

Importantly, stay in contact with your broker (as they should with you) as they will be the first ones to hear of interest rate reductions which might benefit you.