Fears over a further increase in borrowing costs are unnerving Australians, with a decline in two measures of consumer confidence reflecting those concerns in addition to continued cost-of-living pressures.

The Westpac-Melbourne Institute consumer sentiment index fell to 84.4 in September from 88.9 in the previous month, taking views back toward "deeply pessimistic" territory seen earlier this year, Westpac said Tuesday.

A Westpac index tracking consumer interest rate expectations rose more than 7% to 170.4 in September, as around 64% of consumers now believe mortgage rates will rise further over the next 12 months, up from 59% in August, Westpac said.

Higher fuel costs also weighed on sentiment, as Australian pump prices again rose above AU$2 per liter for the first time since April following the end of a temporary measure that halved fuel excise tax. The bank's survey further pointed to unease over job security, particularly among construction and hospitality workers.

A separate gauge from ANZ-Roy Morgan mirrored some of those findings, showing consumer confidence falling 3 points last week to 71.9, the lowest level since late July.

Both surveys follow a stronger-than-expected monthly consumer price index reading in July and more recent gross domestic product data that showed Australia's economy growing slightly below potential. The prospect of another rate hike this year combined with the GDP data may have contributed to weaker sentiment, ANZ said.

ANZ still expects the Reserve Bank of Australia to raise its official cash rate by 25 basis points in November. While Westpac also acknowledged the increased likelihood of a future rate hike, it said the central bank is unlikely to move at its September meeting based on one monthly inflation read alone, especially as the next inflation update is due a day after that meeting.