Some bidders at auctions may have outdated finance pre-approvals. Picture: Julian Andrews.
Property buyers across Australia are heading to auctions and making offers based on pre-approved borrowing figures that may no longer be accurate, mortgage brokers say.
This means they could be in danger of winning the bidding, only to discover they can’t get a loan from their bank.
Alex Veljancevski, a mortgage broker and founder of Eventus Financial, said more potential buyers are at risk every time the RBA raises the cash rate.
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“A pre-approval is a snapshot in time, not a guarantee,” Mr Veljancevski said. “It’s based on your income, expenses, and the interest rate environment at the moment it was issued. When rates move, that figure moves with them, but many buyers don’t realise that until it’s too late.”
The RBA raised the cash rate to 4.1 per cent in March 2026 and economists expect further hikes to come as global uncertainty and conflict keeps upward pressure on inflation.
According to research, each 0.25 percentage point hike reduces borrowing capacity by approximately $18,000 for a household on median income, which means the two hikes this year have stripped about $36,000 from what the average borrower can access.
Buyers who obtained a pre-approval as recently as three months ago, may now be working with a purchase budget that would no longer be approved by a lender.
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“I’m seeing buyers who went through the pre-approval process late last year or early 2026 and are still treating that figure as current,” Mr Veljancevski said. “They’ve found a property and they’re ready to bid, but they haven’t stopped to check whether their position has changed.”
Are you sure you’ve got the right pre-approval in place? Picture: Rohan Kelly
Auctions carry the most risk, as purchases are made unconditionally, unlike private treaty sales, which often have a finance clause as a safety net.
A buyer who wins at auction is legally committed to complete the purchase, regardless of whether their lender subsequently approves a smaller amount than expected.
“If you bid at auction based on a pre-approval that no longer reflects current lending conditions and you win, you’re committed,” Mr Veljancevski said. “When a buyer wins at auction, the lender reassesses income, expenses, liabilities and applies current interest rate buffers, and if rates have risen, the approved loan amount can come in lower than expected.”
This can leave buyers scrambling to bridge a shortfall or, in some cases, unable to proceed with the purchase at all.
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However, Mr Veljancevski said that there is an important distinction many buyers are unaware of. Most lenders will honour a pre-approval for 90 days, meaning a buyer who secures approval before a rate change and transacts within that window should generally be assessed on the original terms.
“The problem is that this is not consistent across all lenders. Some will reassess your borrowing capacity mid-approval period if rates move, even if you’re still within the 90 days,” he said. “Once a pre-approval expires, you’re reassessed from scratch under current conditions regardless.
“Buyers need to understand exactly where they stand with their specific lender and that’s not something you can find on a website.”
Alex Veljancevski said buyers need to stay engaged with their pre-approval terms. Picture: Daniel Sommer Photography, The Dale Studio Chippendale.
Mr Veljancevski said it’s important buyers stay on top of their pre-approval.
“Double-check your pre-approval with your bank or mortgage broker after every rate change,” he said. “This applies for a rate cut too, as in this case, your borrowing capacity might have improved and you can rethink your budget entirely.”
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Even small rate movements can materially impact borrowing power. Data shows repayments on the average new mortgage of $730,000 have already increased by $117 per month following the March rate rise alone.
“With the cash rate potentially heading higher, buyers who go into the market without a current picture of their borrowing capacity are taking on a risk that is entirely avoidable,” Mr Veljancevski said.
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