Is the modular home boom finally here? CBA to allow Modular Home Loans.

The time for pre-fab homes may have finally arrived. The Commonwealth Bank of Australia has become the first major bank to make a significant move to capture a share of the quickly growing offsite construction industry.

Later this quarter, the bank will allow customers to access progress payments prior to the property being affixed to land – up to 60 per cent of the total contract price (80 per cent if they use an accredited CommBank prefab manufacturer).

Customers currently have to fund up to 90 per cent of the upfront costs.

John Davis from Cadsteel which builds about 80 modular homes year said CBA’s simplification of the home buying journey for pre-fab housing will be a gamechanger.

“Something like this will have a huge impact,” Mr Davis said.

“Because one of the problems that we face, in fact, everybody does really, is people don’t have the equity to finance these things up front, so they are forced to go to second, third tier lenders who charge substantial rates.

“I’ve had calls today already from people that have heard about it, saying can you organize this for me so I can get started?

“It’ll ramp up the business nationally. There’s no doubt about that.”

“The sooner it starts the better, if it started today it would be fabulous.”

Mr Davis said the more favourable finance conditions could be one of the solutions to easing the housing crisis.

“There’s a huge accommodation shortage all over the place.

“The Granite Belt alone has massive shortages and all up the Queensland coast there’s massive shortages.

“The Whitsunday region is 4000 homes short, and they are looking to do modular up there, and having a lot of local people who want to fund those, which they can do, but the trouble is, the way the finances are at the moment.”

Standard-form contracts for traditional on-site allow home buyers to enter into an agreement and commence dwelling construction on-site with bank finance.

However, Mike Vacy-Lyle, Group Executive Business Bank at CBA said this streamlined process does not exist for homes built off-site. Mr Vacy-Lyle said,

“Prefabricated construction is fast, efficient and can play a meaningful role in addressing Australia’s housing shortage.”

“To date however, everything about construction has been created with traditional, on-site work in mind, and we need to rapidly reimagine how we support this industry to unlock scale and deliver more quality and sustainable homes to market sooner.”

Damien Crough, founding director of prefabAUS, said working with CBA is significant in overcoming barriers facing the prefabricated housing sector.

“With support from CBA, prefabAUS will tackle some of the challenges facing our members and their clients,” Mr Crough said.

“We’re excited to unlock the potential of off-site construction to address one of the nation’s most critical challenges—providing access to high-quality housing at pace.

“Utilising prefabrication, a house constructed in a controlled factory environment is built in 10 to 12 weeks, compared to around 18-plus months through conventional building.”

Source : The Good Builder
Author : Richard O'Leary