A three-month trial will involve financing the construction of six prefab homes in Auckland and Waikato. If the pilot is a success, the model will then be rolled out nationwide. Westpac NZ Chief Executive David McLean said in a media statement that he hoped the new model would overcome current barriers to finance and free up affordable homes for many New Zealanders.
“Our new way of funding removes some of the hurdles that have existed until now, and gives buyers and builders confidence about partnering on a build.”
McLean confirmed there were complex issues arising over the security of a house while it was being built in a factory. Until now, he said, potential buyers had to grapple with finding a builder willing to carry the risk of a project until the buyer obtained bank finance at the end of the prefab build. The arrangement often entailed a builder securing a large temporary overdraft over the course of two months to finance the build.
While at the time of writing Westpac NZ was unable to supply detailed information of how the pilot finance was structured,
a spokesperson confirmed:
“We are leveraging our existing construction home loan product with additional features built in to protect the customer and the bank from the unique risks in play when building a house offsite.”
“We will take security over the build and make progressive payments through the duration of the building process.”
“We are in the very early stages of the pilot. We went live [in early July] and so far we have two builders signed up. We have three applications in the pipeline that lenders are working through. We have another builder that we are working to include in the pilot.”
Westpac Australia indicated to Built Offsite it recognised the need to re-think finance for the nascent prefab / offsite sector.
“Prefab/modular construction is really interesting area for us, and aspects of it certainly support our organisation’s sustainability commitment.”
“It’s early days for this market; however our lending principles in Australia are broadly aligned with Westpac NZ. We’re currently assessing suitability given the recent growth in this area.” ■