Borrowers resilient after interest rates rise

Consumers are never happy when interest rates rise but they have so far shown unusual resilience to last week's action on lending rates.

The Westpac-Melbourne Institute consumer sentiment index dropped 5.3 per cent in November in the wake of last week's interest rate rise.

Westpac chief economist Bill Evans thought this a "surprisingly resilient result".

"We had expected a significantly larger fall in the index given the interest rate developments - the Reserve Bank's 25 basis point increase ... which was largely unexpected and a move by one of the major banks to increase their standard variable mortgage rate by 45 basis points," he said.

During the 2005 to 2008 period, variable mortgage rates rose eight times to 9.6 per cent from 7.05 per cent, triggering an average monthly fall of 9.3 per cent in the consumer index.

The Commonwealth Bank's decision to lift its lending rate by 45 basis points took it to 7.81 per cent.

Evans said the result might reflect mortgage borrowers' confusion as only one major bank had moved its rates. ANZ, National Australia Bank and Westpac have yet to announce any moves in their variable lending rates.

"Once the other major banks clarify their policies, which will presumably be before the next survey in early December, there may be a follow-up response," he said.

- AAP