Australian consumers have entered the festive season on a positive note, with consumer sentiment reversing November’s decline.

The Westpac-Melbourne Institute Index of consumer sentiment rose by 1.8 per cent in December after falling 4.2 per cent in November, in what was described as a "solid result" by Westpac’s chief economist, Bill Evans.

The index rose to 112.5 points; up from 110.5 in November. Bill Evans said that despite two interest rate hikes this year and rising petrol prices, consumer sentiment was still 7.9 per cent above last year’s average.

However, following the mortgage turmoil in the US, confidence in housing has continued to slip.

The index, which measures whether now is considered a good time to buy, fell a further 4.5 per cent this month, contributing to a 22.6 per cent annual slide in the index.

Overall the mood was buoyant, with a 9.7 per cent surge in the outlook for economic conditions over the next 12 months.

In a separate report, the Australian Bureau of Statistics announced today that personal finance commitments rose 7.7 per cent in October.

Yet while housing finance and lease finance both gained in the month, total commercial finance fell 0.7 per cent, in a sign of caution amid the fallout from the US sub-prime crisis.