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Commonwealth Bank introduces staged prefab loan, but Keystart funds 98 per cent of the total package.
Australia’s housing supply pressures are mounting, and while access to finance remains one of the biggest barriers to prefabricated construction, Commonwealth Bank has developed a product to address it — but in Western Australia, Keystart has gone further by funding the entire package. (main image: An approved Keystart modular builder. Pique Modular’s Breeze, featuring 3 bedrooms and 2 bathrooms.)
Federal Housing Minister Clare O’Neil and her advisers have met with Westpac since Labor’s election win in May, with similar discussions scheduled with ANZ and NAB. Prefabricated housing shifts construction into factory environments where precision, sequencing, and supply chain control shorten build programs and reduce reliance on unpredictable site labour.
At present, most banks only provide finance once a prefabricated home is fixed to land. That forces customers to fund the construction phase upfront, limiting accessibility and slowing wider uptake.
CBA introduces structured prefab loan
Commonwealth Bank has broken with its peers by launching a prefabricated construction loan program, announced at Modscape’s Essendon Fields factory in January. The product is designed to tackle one of the sector’s major barriers — the absence of progressive financing — by offering staged loans for contracts up to $1.5 million.
The structure mirrors standard construction loans, with progressive payments tied to milestones such as deposit, site preparation, framing, and lock-up. Before a dwelling is affixed to land, borrowers can access up to 60 per cent of the build contract or 120 per cent of land value (less debt), whichever is lower. Where the builder is accredited, that amount rises to 80 per cent. Once installation and service connections are complete, the balance is released.
This model aims to ease cashflow constraints for both customers and manufacturers by aligning finance with factory production and delivery schedules. For example, a $750,000 prefabricated home could allow access to around $450,000 before completion under the standard 60 per cent cap. If the builder is accredited, that rises to $600,000, with payments staged across milestones such as deposit, factory production, transport, and installation.
Clare O’Neil stressed that broader lender participation is essential. “The big four banks will play a crucial role in making prefabricated housing accessible to everyday Australians,” she told 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.”
Keystart funds the full modular package
In Western Australia, state-backed lender Keystart has developed a contrasting model designed specifically for modular housing. Its modular loan requires just a 2 per cent deposit and finances 98 per cent of the total cost, covering land, transport, services, and the dwelling itself. Unlike CBA’s structure, which caps lending before installation, Keystart funds the end-to-end process and includes up to four progress payments during offsite manufacturing.
Chief Executive Officer Mark Tomasz said the approach responds directly to gaps in the market. “We saw there wasn’t a product that adequately supported modular housing to grow,” he told Built Offsite. “This aligns with our purpose of delivering more affordable homes and helping to increase supply, particularly in regional WA.”
Keystart has approved five modular builders to date and conducts due diligence on balance sheets, track record, and capacity before partnerships are formalised. Tomasz said the model is unique: “As far as we’re aware, we’re the only financial institution in Australia currently doing this.”
The contrast with CBA’s product is sharpest in regional markets. In areas where land values are low, CBA’s land-linked formula may fall well short of covering the total build cost. Keystart removes that gap by financing the complete package, ensuring transport, site works, and services are included.
As a transitional lender, Keystart also encourages borrowers to refinance to commercial banks once equity builds, often within 12–18 months. This recycling of capital expands the reach of its resources while providing steady demand for modular builders.
For the federal government, the comparison is unavoidable. If it is serious about scaling prefab home loans and lifting supply, why wait for the big four to adapt? Keystart has already demonstrated a model that funds the entire process. Replicating that nationally could remove one of the most significant barriers holding prefabrication back.
