Rate reprieve lifts homeowners but fails to reassure renters
Australians with mortgages are starting to breathe easier after the RBA kept interest rates on hold, but renters are becoming more pessimistic about their chances of owning a home.
- Australian consumer sentiment rose 6% in August after the RBA left rates on hold.
- Mortgage holders drove the improvement in confidence, while renter sentiment slipped overall.
- Renters are becoming more pessimistic about their chances of entering the housing market.
The Westpac-Melbourne Institute Consumer Sentiment Index rose 6% to 88.9 in August after the Reserve Bank's decision to leave the cash rate unchanged.
While the latest index is up from 83.9 in July, Australians remain pessimistic overall.
"Pessimists still outnumber optimists, especially about their current finances," said Luci Ellis, Westpac Group chief economist.
Sentiment below the neutral level of 100 indicates pessimists still outnumber optimists across the country.
The improvement was concentrated among mortgage holders who responded after the RBA's August 11 decision.
See also: Big four banks reveal mortgage collapse
While sentiment among renters improved slightly after the RBA meeting, it fell a little over the month overall.
Renters increasingly pessimistic about home ownership
Even as expectations for house price growth slowed, the report found renters were becoming increasingly pessimistic about their prospects of entering the housing market.
The ‘time to buy a dwelling' index fell over the month for renters, despite it rising 12.1% overall to 95.7, the highest since November 2025.
Tenants were also the least likely to expect housing prices to fall at 21.1%, compared to outright homeowners who are more confident about future housing moderation (43.5%).
"These less negative views about future housing price moves are likely contributing to renters' more downbeat views of whether now is a good time to buy a home, and more broadly, their chances of achieving home ownership in future," Dr Ellis said.
The findings highlight how Australia's housing affordability continues to shape consumer attitudes even as concerns about interest rates begin to ease.
Although the RBA has left the door open to further rate hikes if inflation risks re-emerge, Westpac says there is unlikely to be enough evidence to justify another increase when it meets on 28-29 September.
Households feeling better about their financial position
Compared with a year ago, households reported feeling somewhat better about their financial position.
The survey's measure of family finances jumped 12.6% to 80.0, the strongest improvement among the index's components.
However, the reading remains historically weak.
Consumers were also slightly more optimistic about their finances over the next year, with the measure rising to 98.2, close neutral territory.
"The ongoing pause after this year's interest rate increases continues to ease earlier pessimism, along with the relative lack of news on the Middle East compared with previous months," Dr Ellis noted.
Expectations for the broader economy over the next 12 months (up 5.8% to 82.8) and next five years (up 3.2% to 89.8) also improved, although both remain below long-run averages.
Shoppers still reluctant to open their wallets
The survey's ‘time to buy a major household item' index improved by 8.1% to 93.8, but remained well below the long-run average of 123.
This suggests many households continue to exercise caution when making significant purchases despite the recent improvement in sentiment.
Concerns about unemployment also rose despite the rate reprieve, with the index increasing 4.4% to 135.7, a level above its long-run average.
"Higher reads on this index mean more consumers expect unemployment to increase over the year ahead," Dr Ellis said.
The increase was driven by female respondents, although broadly based across age groups and occupation categories.
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| Lender | Home Loan | Interest Rate | Comparison Rate* | Monthly Repayment | Repayment type | Rate Type | Offset | Redraw | Ongoing Fees | Upfront Fees | Max LVR | Lump Sum Repayment | Extra Repayments | Split Loan Option | Tags | Features | Link | Compare | Promoted Product | Disclosure |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
5.94% p.a. | 5.98% p.a. | $2,978 | Principal & Interest | Variable | $0 | $530 | 90% |
| Promoted | Disclosure | ||||||||||
5.89% p.a. | 5.80% p.a. | $2,962 | Principal & Interest | Variable | $0 | $0 | 80% |
| Promoted | Disclosure | ||||||||||
5.99% p.a. | 6.02% p.a. | $2,995 | Principal & Interest | Fixed | $0 | $0 | 60% |
| Promoted | Disclosure | ||||||||||
5.93% p.a. | 5.93% p.a. | $2,975 | Principal & Interest | Variable | $0 | $395 | 70% | Disclosure |
