Government seeks faster financing for modular homebuyers
The federal government is increasing pressure on the country’s largest banks to extend lending for prefabricated homes, as efforts continue to address the ongoing shortage in housing supply.
Federal housing minister Clare O’Neil and her advisers have held discussions with Westpac regarding the bank’s approach to financing prefabricated housing since Labor’s election victory in May. Similar conversations are planned with ANZ and NAB.
Prefabricated, or modular, homes are viewed as a potential means to ease the housing supply challenge. These dwellings are generally less expensive and can be completed more quickly than traditional builds, as construction occurs offsite in controlled factory environments.
The Albanese government raised the issue of improved access to prefab housing finance with banks at an investor roundtable in November last year. In January, Commonwealth Bank introduced loans for prefabricated homes at the construction stage, permitting customers to borrow up to 60% of the contract value before the dwelling is delivered to its site. In March, the government allocated $54 million to support the expansion of prefabricated construction in Australia. By July, CommBank increased its commitment, offering up to 80% financing for contracts up to $1.5 million, provided the customer selects from approved manufacturers.
Despite these developments, O’Neil has emphasised the need for other major lenders to follow suit if prefabricated housing is to become more widely adopted. Currently, Westpac and other major banks only provide loans for prefabricated homes once they are installed on land, requiring customers to fund construction upfront.
“The big four banks will play a crucial role in making prefabricated housing accessible to everyday Australians,” said O’Neil, in comments published by The Australian Financial Review. “We will continue to raise the prefab question with Westpac, ANZ and NAB so our economy can develop financing solutions that match the speed and innovation of modern prefabricated construction.
“The banking sector’s support for prefabricated housing is fundamental to achieving our housing supply goals. We’re not just asking banks to lend differently... [We want to ensure] no Australian misses out on home ownership simply because they choose a smarter way to build.”
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