RBA Cash Rate Is Now 4.60%: What It Means For Your Home Loan Pre-Approval

The Reserve Bank of Australia (RBA) has increased the cash rate by 0.25 percentage points, from 4.35% to 4.60% on 29 September 2026.

If you already have a home loan pre-approval, you may be wondering whether the amount you were approved for still stands.

In many cases, your pre-approval will not simply disappear because the RBA has increased the cash rate. But the amount you can ultimately borrow may need to be checked again, particularly if your lender changes its home loan rates or serviceability calculations.

That check becomes more important if you were already borrowing close to your maximum capacity or looking at properties near the top of your approved budget.

Can an interest rate rise affect your pre-approval?

Yes. Higher home loan rates can reduce borrowing capacity, which means a pre-approved loan amount may no longer be achievable when the lender completes its final assessment.

When assessing a home loan, lenders do not test your repayments only at the rate you will actually pay. APRA-regulated banks generally apply a serviceability buffer of at least 3 percentage points above the loan rate.

For example, if a lender’s home loan rate increased from 6.00% to 6.25%, a borrower could be assessed at a rate of at least 9.25%, depending on the lender’s policy.

A higher assessment rate means the lender allows more of your income for the proposed mortgage repayment. That can leave less surplus income available in its servicing calculation and reduce the maximum loan amount.

The RBA announcement itself does not recalculate your pre-approval. The effect generally comes later, if your lender changes its rates or assessment settings.

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Does the RBA rate rise cancel your pre-approval?

No. A rise in the cash rate does not automatically cancel an existing pre-approval.

Pre-approval is based on your circumstances and the lender’s policy when your application is assessed. It is still conditional, however, and the lender normally completes further checks before giving formal approval.

Depending on the lender and application, it may need to check your:

• Income and employment
• Living expenses
• Existing debts and credit limits
• Available deposit
• Credit position
• Property and valuation
• Current serviceability
• Current lending policy

The distinction between pre-approval and final approval becomes particularly important when rates are moving.

A buyer can still have a valid pre-approval document while the calculation behind that approval has become less favourable.

Who Is Most Likely To Be Affected?

A 0.25-percentage-point rise will not affect every borrower in the same way.

Our brokers have found rate changes tend to become more important when there was already little room in the original servicing calculation.

You should consider having your borrowing capacity checked again if:

• You were pre-approved close to your maximum borrowing capacity.
• You are looking at homes near the top of your approved price range.
• You have a high Loan-To-Value Ratio (LVR) and limited cash remaining after settlement.
• Your income, debts or expenses have changed since you applied.
• Your pre-approval is several months old or close to expiring.

A borrower with plenty of servicing surplus may see little practical change. Someone who was only just passing the lender’s servicing test can have a very different experience.

I was pre-approved before the rate rise. What should I do now?

You usually do not need to start from scratch.

Start by asking your lender or mortgage broker whether the new rate environment affects the amount you can borrow.

This is worth doing before you make an unconditional offer or bid at auction, especially if you are relying on most of the amount shown on your pre-approval.

Check your current borrowing capacity

Ask for the servicing calculation to be checked using current rates and lending policy.

Your original pre-approval amount may still be available. If it has changed, it is better to know before you commit to a property.

Recheck your purchase budget

Your maximum loan and maximum property price are different figures.

Your purchase budget also needs to allow for your deposit, stamp duty, conveyancing costs, Lenders Mortgage Insurance (LMI) where applicable and other upfront expenses.

It is also worth looking at how much cash you will have left after settlement.

Our brokers regularly speak with buyers who have concentrated on reaching their maximum purchase price without first considering how much of their savings will remain afterwards. Higher repayments can make that cash buffer more important.

Tell your broker if anything else has changed

A rate rise may attract the headlines, but another change in your finances could have an equal or larger effect on the application.

Tell your broker or lender if you have recently:

• Changed jobs or working hours
• Taken out a personal or car loan
• Increased a credit-card limit
• Used some of your deposit
• Had a major change in household expenses
• Had a change in the number of dependants

The lender will generally assess your current position, rather than relying only on the information you provided when the pre-approval was first issued.

What else can change a pre-approval?

Your pre-approval expires

Pre-approvals are normally issued for a limited period. The exact timeframe depends on the lender.

If you need an extension or a new pre-approval, the lender may ask for updated documents and run its servicing calculation again.

If rates or lending policy have changed since the original application, the new result may be different.

The lender changes its policy

Lender policy can move even when the RBA cash rate does not.

Changes can affect how a lender treats things such as variable income, overtime, bonuses, rental income, existing debts, living expenses and certain property types.

This is also why borrowing capacity can differ between lenders.

The property is not acceptable to the lender

Pre-approval mainly tells you whether the lender is prepared to consider lending to you up to a certain amount.

The property still needs to be acceptable.

Once you find a home, the lender may assess its valuation, location, size, title and other characteristics before issuing formal approval.

A simple way to think about it is that the lender needs to be comfortable with both the borrower and the property.

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Should I leave some room below my pre-approved amount?

If you are borrowing close to your limit, some room between your maximum approval and your purchase price can be useful.

It gives you more capacity to absorb changes in interest rates, lender policy, expenses or the amount of cash required to complete the purchase.

That does not mean everyone should deliberately borrow less than they can afford. The relevant question is whether the proposed repayments and remaining cash position are comfortable for your circumstances.

This is particularly worth checking before an auction, where the successful bid will generally create an unconditional contract.

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Could another lender give me a higher borrowing capacity?

It is possible.

Lenders do not all assess borrowers in exactly the same way. Their treatment of income, debts, expenses, and other commitments can produce different borrowing capacity results.

The lender offering the lowest advertised rate will not necessarily provide the highest borrowing capacity either.

This comes up regularly in the scenarios our brokers assess. Two lenders looking at the same borrower can arrive at different maximum loan amounts because their servicing policies are different.

If your existing pre-approval no longer gives you the amount you need, it may be worth checking whether another suitable lender assesses your circumstances differently.

That comparison should take into account more than borrowing capacity alone. Interest rate, fees, loan features and the suitability of the loan still matter.

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What should I check before making an offer?

If you received your pre-approval before the latest rate increase, check these points before committing to a property:

• Is my pre-approved loan amount still achievable under current rates?
• Has the lender changed its serviceability calculation?
• Has anything changed in my income, expenses or debts?
• What is my current maximum purchase price after allowing for buying costs?
• How much cash will I have left after settlement?
• Is the property I am considering likely to meet the lender’s security requirements?
• Is my pre-approval still current?

You do not need to predict the next RBA decision to answer these questions.

They tell you what you can work with now.

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Has the latest rate rise changed your pre-approval?

If your pre-approval was completed before the cash rate increased to 4.60%, it may be worth checking the figures again before you make an offer.

Home Loan Experts can reassess your borrowing capacity and check whether your current lender or another suitable lender can support the amount you need.

Please call us on 1300 889 743 or enquire online and one of our commercial mortgage brokers will get back to you with some options.

The information on this page is general in nature and does not take into account your objectives, financial situation or needs. Lending criteria, interest rates and borrowing capacity vary between lenders and can change. Pre-approval is conditional and subject to final lender and property approval.