Prefabs are increasingly touted as the best way to address New Zealand’s housing shortage, yet banks have long been reluctant to lend on them.

That’s because of the complex issues surrounding the security of prefab houses while they are being constructed in a factory.

But the situation looks set to change as Westpac NZ became the first bank to launch a dedicated mortgage product, Westpac Prebuilt, aimed at helping get Kiwis into prefabricated homes. Westpac NZ head of home ownership Mark Dunmore says they believe houses manufactured off site are crucial to addressing New Zealand’s lack of affordable construction options.

“We are offering a simple, streamlined process for prefab buyers and builders to help put more New Zealanders into affordable and well-designed homes.

“Our new way of funding essentially means we have security before the house is delivered, which removes much of the uncertainty for buyers and builders partnering on a build.”

The introduction of the product follows a successful nine-month test pilot, which involved builders and customers nationwide.

Builders who participated in the pilot are optimistic the new model will eliminate the time-consuming process of writing up bespoke financing contracts and let them get on with building.

PrefabNZ chief executive Pamela Bell says Westpac’s financing model simplifies the most complex part of buying a transportable home.

“The type of support being offered through this new programme has never been seen in New Zealand. We expect it to be a hit with buyers and builders.”

Demand for prefabs is already increasing: PrefabNZ’s 2018 Capacity and Capability Report estimated 4,000 prefab homes will be built in 2019 and 7,000 in 2020.

But Dunmore adds the prefab market is set to extend further over the next few years.