Consumer sentiment rose 4.1% to 83.9 in July, up from 80.6 in June, according to the latest Westpac-Melbourne Institute Consumer Sentiment Index. Despite the gain, the reading remains among the weakest in the survey's 50-year history, sitting in the bottom 10% of all results recorded.
Westpac's head of Australian macro-forecasting, Matthew Hassan (pictured), attributed much of the improvement to relief that feared economic shocks had not materialised.
"Some of the July improvement looks to be relief that 'worst case' scenarios – around energy prices, interest rates, and jobs – are not playing out," Hassan said.
He noted, however, that family finances remain under pressure and sentiment stayed sensitive to overseas developments, weakening as tensions in the Strait of Hormuz escalated during the survey week.
Falling fuel prices helped lift the 'family finances vs a year ago' sub-index by 5.6% to 71.1, while the 'family finances, next 12 months' measure jumped 13.4% to 96.5, aided by easing rate-hike fears. Views on the broader economy barely shifted, with the 'economy, next 12 months' sub-index up just 0.6% to 78.3.
Mortgage rate fears ease, but few are confident either way
Fewer consumers now expect further mortgage rate rises, with 60% anticipating increases over the next year, down from 66% in June. Even so, conviction remains thin, with 17% of respondents saying they simply "don't know" where rates are headed, the highest share since March 2022.
That uncertainty carries a real cost: a further August hike, lifting the cash rate to 4.6%, would push the share of mortgage holders at risk of stress to 30.2%, or 1.6 million people, according to Roy Morgan modelling.
The “time to buy a dwelling” index rose 5.3% to 85.4, extending a rebound from May's extreme lows. However, the Westpac-Melbourne Institute House Price Expectations Index fell 8% to a three-year low of 118, with only 47% of consumers now expecting prices to rise over the next year, down from a clear majority previously.
Westpac expects the RBA to lift the cash rate by a further 25 basis points in August, contingent on the June quarter CPI result due 29 July.
Consumer sentiment index
83.9
-9.9% yr
House price expectations
118.0
-27.5% yr
Interest rate expectations
162.6
+95.5% yr
Source: Westpac-Melbourne Institute Consumer Sentiment, July 2026. Survey of 1,200 adults, conducted 6-9 July.
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