The latest Westpac - Melbourne Institute Consumer Sentiment Index showed declines by up to seven percent to 108 points in May, coming from 116.1 index points in the previous month and apparently reeling from the effects of interest rates increases and drops on global share markets.

Westpac chief economist Bill Evans said that the recent federal budget also contributed to the slipping consumer confidence and coupled with a declining Australian dollar, which is down by more than 4 percent, and the almost 7 percent plunge in market shares.

Mr Evans told ABC that all these "factors combined with the rate hikes have led to this fall in the index and quite frankly, given all those factors, a 7 per cent fall was a little less than I expected."

He said that consumer confidence would further fall should mortgage rates reach beyond the 7 percent mark and more rate hikes are seen as "we all starting to take notice of these rate hikes. In the last rate hike cycle, once mortgage rates were pushed beyond that 7.3 per cent, we saw an average fall of about 8.5 per cent in confidence."

The Reserve Bank of Australia's (RBA) board meeting minutes has indicated though that rates currently in effect are satisfactory and hinted that no further hikes should be expected for the months of June and July.

Mr Evans can only agree with the apparent signs revealed by the RBA board meet minutes as he stressed that the May consumer confidence report will give the central bank a valid reason to postpone further rates increases.

"The evidence here that rate hikes are starting to bite, that the Reserve Bank now sees rates back at normal levels, I think we can be pretty confident that there'll be no rate hike when the Reserve Bank next meets on the first of June," he said.

The current rate levels though appeared to have discouraged a great deal of buyers as the survey returned the same weak numbers for house buying prospects last seen in 2008, 2004 and the early 1990s.

Mr Evans is under the impression that the housing market is deteriorating and buyers are losing their interest for housing as he pointed out that "the index fell by 15.4 per cent in May, it's now down 36 per cent from its long run average, and 40 per cent from its recent peak in August last year."