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Finance /09.08.23

August cash rate update: are pre-approvals worthwhile in a changing-rate environment?

This month, the Reserve Bank of Australia (RBA) chose to hold the cash rate at 4.1%. This is the second month in a row the Bank chose to hold the cash rate following positive signs in inflationary data.

With the uncertainty around the future of interest rates - whether they will keep increasing or have reached their peak - our Clarendon Homes Construction Home Loan Specialists are regularly asked about limitations around pre-approvals and whether they are worth getting. So let's take a closer look...

In short, pre-approvals are a good idea if you are serious about buying property. Here is why.


  1. give you confidence a lender is satisfied with your current situation to lend you the money you need.
  2. provide an understanding of how much you may be able to borrow.
  3. can speed up the process of getting your loan approval as the lender already has your information to make the final assessment.
  4. remove some of the stress when you find your dream home and are ready to commit as you have already completed a lot of the paperwork and submitted key documentation.

In saying this, there are some limitations to pre-approvals to be aware of. A pre-approval is a good indication of your borrowing power and that the lender is happy to lend to you at that time. However, it is conditional, based on your circumstances and the interest-rate environment at the time of the application. This means if anything changes between the time you received your pre-approval - either within your circumstances or if there have been significant changes with interest rates - your final application can be impacted. Small changes to interest rate is unlikely to impact your pre-approval. That said, we will work with you to do everything in our power to get your finances across the line.

How long does a pre-approval last?

The timeframe a pre-approval is valid for depends on the lender. In general, it is around three months, but can be up to six. However, if your circumstances change or there is a change in the cash rate, it is a good idea to reach out to your broker for a chat to determine if your borrowing power could have been impacted.

If your pre-approval is approaching its expiration, speak to your broker to discuss your options including applying for an extension or a new pre-approved product.

Speak to our Finance Experts

Let our team of Construction Loan Specialists help you with anything finance related, every step of the way. You have nothing to lose! Our construction loan expertise and service comes at no cost to you. Learn more and make an enquiry.