Australian consumer confidence fell to a four-year low in November, while sentiment among mortgage holders reached its lowest point in records dating back to 1994. The Westpac–Melbourne Institute survey captures growing pressure on households as interest rates and living costs rise, but it does not show that Australia is in a recession.

Mortgage holders face a record-low reading

The overall sentiment index stood at 78.2, its weakest level since late 2022. Among mortgage holders it dropped 11.6% in November to 68.1. The survey’s measure of the economic outlook for the next year also matched a low last recorded in August 2020.

Westpac economist Matthew Hassan said readings this weak had previously been recorded during major downturns, including the early 1980s and 1990s recessions, the global financial crisis and the start of the Covid pandemic. He said today’s economic backdrop was less extreme than during the pandemic, but described a similar sense of helplessness among households, particularly over fuel prices.

The survey was conducted as the Reserve Bank of Australia made its latest rate decision. The central bank raised its cash rate by 25 basis points to 4.85%, its fifth increase this year and the highest level since 2008. Annual inflation was 4.3%, while petrol prices had approached A$2.40 a litre. For a borrower with a $600,000 mortgage over 25 years, the five rate rises since February added $456 to monthly repayments, including $92 from the latest increase.

Among respondents surveyed after the latest decision, 72% expected mortgage rates to rise again over the next 12 months. That was down from 80% the previous month, but up from 64% in September. The survey’s house-price expectations index fell 13.4% to 99.6, its first reading below 100 since November 2022.

A warning about recession, not a recession finding

Reserve Bank governor Michele Bullock had warned a week earlier that the year ahead could feel like a recession, citing persistent living-cost pressures and weak economic growth. The sentiment survey adds evidence of household concern, but does not establish whether the economy will enter a recession.

Business indicators also weakened. National Australia Bank reported that business conditions and confidence fell for a third consecutive month in October, moving further into negative territory, while employment held up relatively better. AMP economist My Bui said the decline in confidence and business conditions was an early sign that rate rises were working. She expected squeezed business margins and softer forward orders to weigh on activity, and said unemployment risks could further dampen spending and house prices.

Markets are pricing in a different rate path

Despite households’ expectations of further increases, financial markets were assigning more than a 50% probability to an RBA rate cut by August 2027. A reduction to 4.6% was fully priced in by December 2027. Hassan’s own base case was that rates would start falling from August 2027, with no further hikes.

Investors have been revising their expectations alongside a retreat in global oil prices. Brent crude fell 20% to below US$94 a barrel after reaching nearly US$118 at the end of October. The contrast between household expectations and market pricing shows how uncertain the outlook remains; neither is a guarantee of what the Reserve Bank will do.