Bankwest to open progress payments for modular properties

Following talks with the Housing Industry Association (HIA) Western Australia, Bankwest has made the decision to “remove barriers” to home buying and support rapid supply of homes in Western Australia via the introduction of additional progress payments to support delivery of modular properties.

Modular homes refer to dwellings that are constructed off-site from the purchased land, which are later delivered for installation and connection to utility services.

Bankwest aims to abolish certain barriers associated with developing modular homes by enabling customers to authorise an additional payment stage for up to 95 per cent (90 per cent for investment loans) of the value of the land.

The non-major bank has confirmed that these payments will be available for applications without lenders’ mortgage insurance (LMI), with a loan-to-value (LVR) lower than, or equal to, 80 per cent.

According to Bankwest, a hurdle for the development of modular homes has been the structure of progress payments to construction companies, which involved two stages (deposit and completion).

Bankwest general manager, products and digital services Peter Bouhlas said Bankwest believes this move 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 Western Australia property market and it’s not uncommon to experience construction delays of about two years,” Mr Bouhlas said.

“Modular constructions make them an appealing option for aspiring home owners, who could cut those delays to about 20 weeks, but the inability for companies to cover their construction costs has been a significant barrier.”

HIA executive director – Western Australia Michael McGowan said more builders and consumers have turned to alternative methods of construction to accelerate housing delivery over the past three years.

“Modular construction has been well-known to the Western Australia public for a long time, stereotypically as a donga on a mine site, but more recently this stereotype has changed and modular construction is now a quality product offering,” Mr McGowan said.

“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.”

Mr Bouhlas added that the bank will 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”.

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