Bankwest has moved to support the Western Australian housing market with the introduction of an additional progress payment to support the rapid delivery of off-site constructed, modular properties for home buyers in WA.
The decision follows ongoing conversations with the Housing Industry Association WA on opportunities to remove barriers to home buying and support the rapid supply of much-needed new homes in WA.
Modular homes, also referred to as prefabricated, kit, or transportable properties, are dwellings constructed away from the purchased land and later delivered to site for installation and connection to utility services.
The builds maintain adherence to building and construction standards, while generally being more affordable and significantly quicker to complete than on-site dwellings, making them an appealing option in the current market.
However, a challenge for the development of modular homes has been the structure of progress payments to construction companies, which has typically involved just two stages – deposit and completion.
The upfront construction outlay prior to companies recouping expenses can result in the cancellation of contracts and creates barriers for a construction method that could prove desirable for customers in the current market.
Bankwest has sought to eliminate those barriers with a policy adjustment that will enable customers to authorise an additional payment stage for up to 95 per cent of the value of the land (90% for investment loans).
The additional progress payment will be available for applications without Lenders Mortgage Insurance (LMI) and with a Loan to Value Ratio (LVR) equal to or lower than 80 per cent.
It makes Bankwest the market leader in the provision of progress payments for modular home constructions.
Bankwest General Manager Products and Digital Services Peter Bouhlas said: “Bankwest strives to be a simple, easy bank for Australian homeowners, and we believe this is a valuable change for customers and builders alike.
“Labour and supply shortages that took hold during the global pandemic continue to create challenges for the WA property market, and it’s not uncommon to experience construction delays of about 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.
“Bankwest’s additional progress payment for modular homes reduces the barrier, ensuring funding flows to constructors that have also experienced significant turbulence, and customers move into their homes sooner.
“We’ll continue to work closely with government, industry and community leaders to explore every opportunity to remove barriers to home buying and support the rapid supply of new homes in Western Australia.”
Housing Industry Association Executive Director – WA Michael McGowan said: “Over the past three years we’ve seen more builders and consumers turn to alternative methods of construction to deliver housing faster.
“Modular construction has been well known to the WA public for a long time, stereotypically as a donga on a mine site, but more recently this stereotype has changed, and modular construction is a now a quality product offering.
“Access to finance without construction occurring onsite has long been a barrier to growth for modular builds, and Bankwest’s latest product reduces the risk for both parties by providing a progress payment through construction.
“Cash flow in the current market is critical for builders and, while modular building presents speed of construction benefits, the additional progress payment removes significant stress on both sides.
“Bankwest’s support of the WA housing industry has been outstanding and its willingness to consult industry and support innovation not only helps builders, but more Western Australians getting into their own homes.”
Bankwest’s vision is to be a simple, easy bank for the Australian homeowner of today and tomorrow, and our purpose is to build a brighter future for all. Bankwest provides personal and everyday banking solutions for customers across Australia. We support customers in doing their banking in the ways that suit them, with innovative digital solutions, an Australia-based 24/7 Contact Centre, a passionate broker community, and our WA branch network. Bankwest is a division of Commonwealth Bank of Australia ABN 48 123 123 124 AFSL/Australian credit license 234945.