If you’ve been dreaming of a new home but feeling priced out or frustrated by long build times, there’s some good news—the Commonwealth Bank of Australia (CBA) is stepping up to back prefab homes.
Prefab homes (aka factory-built homes) are constructed in a controlled environment and then delivered to the building site, meaning they’re cheaper, faster, and more efficient than traditional builds.
But until now, most banks wouldn’t finance them because the usual loan system is designed for homes built on-site. That’s finally changing.
CBA says “yes” to prefab home loans
CBA is making history as the first bank to join prefabAUS, an industry association for prefabricated housing. As part of this initiative, the bank will finance standardised building contracts, making it easier for homebuyers to secure loans for prefab homes.
This decision follows a housing roundtable hosted by Treasurer Jim Chalmers in November 2024, where industry leaders discussed ways to cut costs and speed up construction.
With Australia facing a housing shortage, the Albanese government’s National Housing Accord has set a goal of building 1.2 million homes by 2029.
However, current forecasts from the Housing Industry Association suggest a shortfall of 300,000 homes, prompting calls for modern construction methods to bridge the gap.
CBA’s business banking group executive, Mike Vacy-Lyle, believes prefabrication is key to solving Australia’s housing crisis.
“To date, everything about construction has been created with traditional, on-site work in mind, and we need to rapidly re-imagine how we support this industry to unlock scale and deliver more quality and sustainable homes to market sooner,” Vacy-Lyle said.
He also pointed out that in countries like Sweden, up to 80 per cent of houses are factory-built, suggesting that Australia could see similar growth in the prefab sector.
What the CBA’s new loans mean for homebuyers
CBA is breaking new ground by offering customers up to 80 per cent of the cost for prefab homes—an unprecedented level of support from a major lender. However, there are some conditions:
- The loan program won’t start until late February or March.
- If customers use a prefabrication business that isn’t affiliated with the bank, CBA will only finance up to 60 per cent of the build’s value.
- Currently, most homeowners opting for prefab construction pay up to 90 per cent of the costs upfront themselves.
Industry leaders are welcoming the move, saying it will increase affordability and accessibility for prefab housing.
Faster, more efficient homes on the horizon
According to prefabAUS founding director Damien Crough, prefab homes can be built in just 10 to 12 weeks, compared to the 18+ months required for traditional construction.
“We are excited to unlock the potential of off-site construction to address one of the nation’s most critical challenges—providing access to high-quality housing at pace,” Crough added.
One of the prefab companies on CBA’s approved list, Modscape, has already begun scaling up operations. CEO Jan Gyrn revealed that with CBA’s backing, they’ve installed a robotic production line at their Essendon Fields factory, increasing efficiency and allowing them to build homes even faster.
“We’re able to complete eight modules a day, providing a great option for the rapid delivery of much-needed homes for Australians,” Gyrn said.
With CBA leading the charge in financing prefab homes, this could be the breakthrough the industry needs to help tackle Australia’s housing shortage—one factory-built home at a time.
