Westpac has unveiled a new scheme that will make it easier for first home buyers to obtain finance for a prefabricated home.
An initial three-month trial will involve the construction of six prefab homes in the Auckland and Waikato areas. Subject to pilot success, the model will then be implemented nationwide. According to Westpac NZ chief executive David McLean, the model will transform prefab housing into a viable option for first home buyers who currently face barriers to obtaining finance.
“We identified this issue from talking to our customers in terms of what was holding them back, and we’re expecting enquiries to really ramp up,” chief product officer Shane Howell told NZ Adviser.
“There have been several studies done, and a prefab build can save on average a total of 15% in construction costs and 50-60% in build time. That’s of quite a considerable benefit to our customers.”
According to Howell, banks have not done enough to meet the needs of the industry or the consumer when evolving products and services for this developing market. There are certain financial risks associated with having a home built by a third party on an alternate site, and these have previously been a barrier to obtaining lending. Westpac says the new scheme will remove some of these hurdles, and give buyers and builders confidence about partnering on a build.
“We’ve tried to mirror existing processes as far as possible,” says Howell. “We’ve changed a lot of things on our end, but we’ve tried to make it as easy and convenient as possible for the end customer to get into their home.”
“There’s a lot of industry forecast that suggests there could be around 4000 prefab homes built over the course of 2019, and up to 7000 in 2020,” Howell continues. “We as a banking and insurance industry play a significant role in helping New Zealanders financially; we’re really taking a lead here, and we hope that others will follow. The affordability crisis won’t get solved overnight, but it’s schemes like this that will really make a difference.”