Westpac Consumer Sentiment Fell to a Four-Year Low. The Present Got Better.

“australian interest rates just went up again, better pull back on my spending of (checks notes) my mortgage” — louisehollandauthor posted that on Threads the morning after the Reserve Bank’s fifth rate rise of the year, and the replies underneath it were not jokes. “In 2020 when we bought our house it was 450 a week. It is now 790. This is fucked,” a borrower posting as ayoescudero wrote. Another was trying to sell a house to settle a divorce, and the rise landed in the middle of the sale.

The Westpac consumer sentiment survey, published on Tuesday morning by Westpac and the Melbourne Institute, says the same thing in numbers, and then says something stranger. Its consumer sentiment index fell 2.7% to 78.2 in November, the lowest since late 2022, after falls of 5.2% in September and 4.7% in October. Sentiment among mortgage holders dropped 11.6% in the month to 68.1, the lowest reading since records for that group began in 1994. The survey covered 1,200 adults. It ran between 2 and 6 November, as the Reserve Bank lifted the cash rate to 4.85%.

Inside the table, the two halves of the survey moved in opposite directions. Australians’ assessment of their family finances compared with a year ago rose 3.0% to 68.8. Their view of economic conditions over the next twelve months fell 10.2% to 70.3, the weakest since August 2020, when Melbourne had just entered its second lockdown and unemployment was surging. The five-year outlook slipped 1.0% to 84.6, already its lowest since August 2020. Both family-finance readings sit 19 points below their long-run averages, so the present is not good. It stopped getting worse in November. The future is what fell.

Westpac’s head of Australian macro-forecasting, Matthew Hassan, put the history in the bulletin itself. Before late 2022, readings this weak had only ever appeared in the economy’s darkest moments: at the onset of the COVID pandemic, at the height of the global financial crisis, and during the recessions of the early 1990s and the early 1980s. Late 2022 was the last time the index was this low. Annual inflation was running at close to 8%. The Reserve Bank had raised the cash rate by four percentage points in little over a year. The “time to buy a major household item” gauge, at 80.0 after a 3.7% fall, is more than 40 points below its long-run average of 123. Across the 623 surveys run since the mid-1970s, only fifteen have seen a weaker reading on that question.

Three pressures did the damage in the last month. Hassan named them in one line: petrol pushing towards A$2.40 a litre, official inflation at 4.3% a year, and the Reserve Bank’s fifth rise of 2026. The cash rate is now 4.85%, an 18-year high. The five rises this year, from 3.60% to 4.85%, added about $419 a month to the repayments on a $600,000 mortgage over 25 years. The latest rise alone, 25 basis points, added about $86. Among the respondents surveyed after the Reserve Bank’s decision, 72% expect mortgage rates to rise further over the next twelve months, down from 80% in October and up from 64% in September.

The housing numbers split by state in a way the national figure hides. The house price expectations index fell 13.4% to 99.6, its first reading below 100 since November 2022 and the second-biggest monthly fall since the COVID period. In Queensland it fell 32% to 86. Western Australia fell 20% to 93, South Australia 18% to 92. New South Wales tracked the national result, down 13% to 103. Victoria barely moved, down 2.4% to a still positive 113. At the same time the “time to buy a dwelling” index rose 1.3% to 89.6, and Westpac noted that some consumers are starting to see lower prices as a potential buying opportunity. Buyer sentiment sits above neutral in Victoria at 101, and at 93 in Queensland, 91 in New South Wales, 76 in South Australia, 56 in Western Australia and 54 in Tasmania.

Households and financial markets now disagree about what happens next, and the survey records both sides of the argument. The 72% expecting further rises is the household side. The market side, reported by the Guardian, has begun pricing in a rate cut from the middle of next year. ANZ puts the probability above 50% by August 2027. A cut to 4.6% is fully priced in by December 2027. Hassan’s own base case is that rates start falling from August 2027, with no further hikes. Westpac expects the Reserve Bank to pause at its 7–8 December meeting to assess how the tightening so far is landing. February is the next meeting at which a rise would be actively considered. No rise is expected then either.

The bank publishing the gloom has its own numbers on how its borrowers are actually doing, and they do not match the mood. Westpac told investors a week ago that just 0.67% of its mortgagors were more than 90 days behind on their payments at 30 September. That is the same level as a year before, despite four rate rises since February. The balances in mortgage offset accounts rose from $71 billion to $81 billion over the year. More holders are ahead on their payments than a year ago. “Consumer sentiment is down, but spending activity doesn’t reflect that,” chief executive Anthony Miller said at the results briefing. The same morning’s NAB business survey showed the other side of the squeeze: business conditions in Victoria fell to minus six points in October, the lowest of any state, against a national reading of minus one, with consumer-facing sectors softening most.

The borrowers on the Threads post describe the present as the injury. “I have a lot of friends who got a mortgage when it was safely in their budget and now, between this, fuel and groceries, they’re look at down sizing,” thea.belmont wrote. The seller in the divorce, posting as oh_mr_sheffield, put it as a run of bad luck with a buyer: “we’ve already had a buyer say yes then no then yes then no and this is not going to help keep that as a yes.” thatceoempire, a verified account, wrote, “I make 6 figures and it’s still not enough. I miss the old Australia.” Another reply, from jg_the_ot, took the sarcasm further. “If you spend more on your mortgage, you’ll have less to spend on unimportant things like fuel and bread.”

Michele Bullock, the Reserve Bank governor, named the feeling a week before the survey measured it. “Our central forecasts do not see us going into recession, but it does see growth slowing quite markedly,” she told her 3 November media conference. “It shows that consumption is quite sluggish, and I think that is going to make people feel like it’s a recession because they feel poorer, their spending can’t grow very quickly because their incomes aren’t growing very quickly.” She added that the bank did not see the economy cracking. One sign pointed the other way: the number of Australians holding more than one job is rising. People under cost pressure are looking for second jobs, and finding them. “Cost-of-living concerns remain front and centre,” Hassan wrote in the bulletin. The borrowers’ version is shorter: the mortgage went from $450 a week to $790, and the fuel and the groceries came on top.

Christmas, the first test of whether the mood becomes behaviour, looks restrained rather than cancelled. In the survey’s additional questions, 38% of consumers plan to spend less on gifts than last year, against 46% spending about the same and 14% more. That 38% compares with 36% last year. The 20-year average is 34%. It is slightly less than the 39% who planned to cut back when the cost-of-living crisis was biting hardest in 2022 and 2023. Mortgage holders are tighter: 92% of them plan to spend the same or less than last year. Job-loss fears are rising gradually rather than suddenly. The unemployment expectations index rose 1.6% to 144.4 in November, up 11% since July, and Westpac described consumers as on edge about jobs rather than alarmed.

A second survey, the weekly ANZ-Roy Morgan reading released the same morning, put Australian consumer confidence at 63.1, down 3.1 points on the week and its third-lowest result since that series began in 1973. Confidence among mortgage holders in that series fell to its lowest since the weekly measure began in 2008.