CommBank goes all in on prefab home finance

Off-site homes playing 'meaningful role' in housing shortage, says bank exec

CommBank goes all in on prefab home finance

Commonwealth Bank of Australia has become the first major bank to join prefabAUS, the leading industry body for Australia’s ‘off-site’ construction sector. 

Via the partnership, CommBank will sponsor the development of a standard form contract to help homebuyers and manufacturers enter the prefab market with bank finance. 

Prefab homes are manufactured off-site in sections and then transported to the final location for assembly. They allow for faster construction, lower costs and reduced material waste compared to traditional on-site building methods. 

They are also playing “a meaningful role in addressing Australia’s housing shortage”, said Mike Vacy-Lyle (pictured), group executive for business banking at CommBank. 

“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,” he added. 

What brokers need to know 

CommBank announced new policy changes to improve access to finance for prospective customers. 

The policy changes, due this quarter, will enable customers to access progress payments prior to the property being affixed to land of up to 60% of the total contract price. Customers currently have to fund up to 90% of the upfront costs. 

“While prefabricated homes are a great housing option for many Australians, they have been historically challenging to finance, with customers needing to cover much of the upfront costs,” said Michael Baumann, CommBank’s executive general manager of home buying at CBA

“We want to alleviate some of the financial barriers associated with prefabricated properties. We believe these upcoming changes will help to achieve just that, giving more Australians the chance to look at this way of building a home, which could, in turn, help deliver more supply to market faster.”