Borrowers are gloomier than they have been since the global financial crisis and economists warn the pain will get even worse for households and retailers if interest rates keep rising as expected.

The Reserve Bank of Australia’s decision last week to keep the cash rate on hold at 4.1 per cent appears not to have improved the mood, with consumer sentiment falling 0.8 points over the past week, according to the latest ANZ-Roy Morgan survey, released on Tuesday.