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Homeowners and modular builders to benefit from Bankwest’s revised banking terms.
Financing modular builds in Australia has always been problematic. However, Bankwest’s announcement last week is set to make modular buildings more accessible to homeowners. The changes will add an additional ‘accelerant’ and further boost the growing recognition and popularity of modular construction in the state. (main pic: Perth-based OFFSITE’s panelised timber design-to-construction process.)
Targeted at the Western Australian housing market, Bankwest has announced its support for an additional progress payment for modular-built property. This initiative stems from dialogue with the Housing Industry Association WA, focusing on dismantling barriers in home buying and accelerating the supply of new homes in the region.
Peter Bouhlas, Bankwest’s General Manager of Products and Digital Services, emphasised the bank’s commitment to simplifying the home-buying process for Australians. He highlighted that this new financial change is beneficial for both customers and modular builders. The decision was also influenced by the challenges faced by the WA property market, notably the labour and supply shortages intensified by the global pandemic, which has resulted, in some instances, of construction delays of nearly two years.
“Modular constructions make them an appealing option for aspiring homeowners who could cut those delays to about 20 weeks, but the inability for companies to cover their construction costs has been a significant barrier.”
However, a major obstacle has been the financial burden on companies to cover construction costs upfront, often leading to contract cancellations and hindering modular construction.
Addressing this issue, Bankwest has revised its policies to allow an additional payment stage, enabling up to 95% of the land value to be financed (90% for investment loans). This initiative is available for applications without Lenders Mortgage Insurance (LMI) and with a Loan to Value Ratio (LVR) equal to or below 80%. This policy adjustment positions Bankwest as a leading bank in supporting modular home construction.
Bouhlas added, “Bankwest’s additional progress payment for modular homes aims to ease funding challenges for constructors and expedite the move-in process for customers. We are dedicated to working alongside government, industry, and community leaders to further remove home-buying barriers and foster the rapid development of new homes in Western Australia.”
Echoing these sentiments, Michael McGowan, Executive Director of the Housing Industry Association – WA, recognized the growing interest in alternative construction methods. He noted that the public perception of modular construction in WA has evolved from being associated primarily with mining sites to being recognised for its quality. McGowan stressed that the access to finance for off-site construction has been a longstanding hurdle, and Bankwest’s initiative reduces risks for all parties involved, crucially supporting cash flow in the current market.
See: https://www.bankwest.com.au/personal/home-buying/construction-loans
