Mortgage brokers are warning that more buyers are heading to auction with pre-approvals that no longer reflect what banks will lend. The stakes are rising with every Reserve Bank (RBA) move.
Alex Veljancevski (pictured), mortgage broker and founder of Eventus Financial, said too many clients still treat pre-approvals as fixed.
“A pre-approval is a snapshot in time, not a guarantee. 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,” Veljancevski said.
The RBA’s March cash rate increase to 4.1% – its second consecutive rise this year – has cut into borrowing capacity just as buyers attempt to stretch budgets.
According to Cotality, each 0.25 percentage point hike reduces borrowing capacity by about $18,000 for a household on median income. The two moves so far in 2026 have already stripped roughly $36,000 from what an average borrower could previously borrow, with further erosion likely if another hike lands in May.
Fresh Canstar analysis paints a similar picture. Data insights director Sally Tindall says the latest rate hike slashes “roughly $12,000 off the average Australian’s maximum home buying budget,” and that a couple on two average incomes could see about $24,000 shaved off from a single move, with the cumulative hit from recent increases potentially nearing $40,000 if another rise lands in May.
For buyers who secured pre-approval late last year or early 2026, the number they are working with may now be well above what a lender would approve today. The danger is greatest at auction, where purchases are unconditional and there is no finance clause.
Veljancevski said he is seeing more clients bid first and check later.
“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. They've found a property and they're ready to bid, but they haven't stopped to check whether their position has changed,” he said.
If a lender reassesses income, expenses, liabilities, and rate buffers after a win and approves a smaller loan than expected, buyers can be left scrambling to bridge the gap or unable to complete the purchase at all.
That risk is playing out against a shifting auction backdrop. New Ray White data show a more cautious but still competitive auction market, with clearance rates easing to 57.7% and open home attendance “fell sharply to 2.4 attendees per property, down from 2.9 last week and 3.1 a year ago”, while average active bidders held steady at 2.3 per auction.
While most lenders will generally honour a pre-approval for 90 days, Veljancevski cautions that policies differ. Some lenders will reassess mid-period if rates move, and once a pre-approval expires, applicants are tested from scratch under current conditions.
His guidance is straightforward: treat pre-approvals as dynamic, especially in a rising-rate cycle.
“Double-check your pre-approval with your bank or mortgage broker after every rate change. This applies for a rate cut too, as in this case, your borrowing capacity might have improved and you can rethink your budget entirely,” Veljancevski said.
With repayments on the average new $730,000 mortgage already up by $117 per month after March’s rise alone, Veljancevski said buyers who enter auctions without a fresh view of their borrowing power are “taking on a risk that is entirely avoidable” – and it is brokers who are best placed to help them avoid it.
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