What Lenders Are Funding in Construction Going Into FY27
What Lenders Fund in Construction FY27 | Switchboard Finance
Construction Finance
Construction Finance · Lender Appetite · FY27
What Lenders Are Funding in Construction Going Into FY27
Going into FY27, bank appetite for construction has narrowed at the speculative end, while the non-bank stack has widened to take up the slack. Which lender says yes now turns on the stage your build has reached. This is the lender-eye read on where the money is moving, and which lane fits.
Quick Answer
Going into FY27, construction lender appetite has shifted, not closed. Construction finance now spans a stack of facilities, and the lane that fits depends on the stage you are at. Read the stack before you pick a lender.
What lenders are funding in construction now
What lenders are funding now is selective, not shut. From the underwriter's seat, the FY27 picture is less a closed door than a moved one: appetite has shifted, not closed. Major banks have pulled back on speculative and presale-light development, while non-bank and specialist funders have widened their books to fill the gap.
That matters because construction finance is not one product. It is a stack, running from a commercial property loan on a finished, tenanted asset through to development finance on a build that is still a hole in the ground. The lender who says no to one rung of that stack will often say yes to another.
Open banking is widening the field too. From 13 July 2026 the Consumer Data Right extends to non-bank lenders, according to Treasury, which lifts rate and term transparency across exactly the part of the market where a growing share of construction lending now sits.
What the approvals data is telling lenders
What the approvals data is telling lenders is that demand is holding, even as the month-to-month figures wobble. Building approvals slipped in April on a monthly basis, but the year-on-year trend and the value of work entering the pipeline both point up. From the underwriter's seat, that is the difference between a soft month and a soft sector, and FY27 reads like the former.
Those are market numbers, not a forecast for your build, but they frame the FY27 read. Approvals are running ahead year-on-year, indicative across lenders, and a sector that keeps growing is one funders want exposure to. That is why appetite has held even where individual banks have stepped back.
The non-bank stack, and where each piece fits
The non-bank stack is the set of facilities that fund a build when a single bank loan will not, and each piece fits a different stage. Knowing which rung a lender is actually pricing is half the battle, because the same project can be a yes and a no depending on how it is framed.
What is funding faster
- Finished, tenanted commercial premises with real equity
- Builds with solid presales or pre-commitments
- Refinances of completed, income-producing stock
- Short caveat top-ups sitting behind a clear exit
What is slower to clear
- Speculative builds with no presales and thin equity
- Development requests with no documented exit
- Applications missing current financials or a feasibility
- Deals where the security stage and the facility do not match
Each rung has its own appetite. A commercial property loan suits a finished, income-producing asset; development finance funds the build itself in staged drawdowns; and a caveat loan can cover a short gap behind a clear exit. Presales remain the swing factor on the development rung, as our note on development finance without presales explains, and where a build needs a fast second-ranking top-up, the second mortgage versus caveat read sets out the trade-off. The construction loan pack walks through the documents that move any of these faster.
Fund the stage you are at
The practical move going into FY27 is to fund the stage you are at, not the stage you wish you were at. A site you have just settled, a build at lock-up, and a finished asset you want to refinance are three different lending conversations, and lining up the wrong one wastes weeks. Indicative LVR ceilings vary by lender at every stage, so the real question is which stage the security is actually at today.
Build standards matter to that conversation as well. Lenders increasingly want comfort that a project meets the National Construction Code, maintained by the Australian Building Codes Board, before they release funds against it. For a current read on pricing across the finished-asset rung, our commercial property loan rates note is a useful starting point, and the construction hub maps the whole journey from site to settled asset.
Going into FY27, construction funding has not dried up; it has rearranged. Appetite has shifted toward the non-bank stack, where each facility, from commercial property loans to development finance to caveat top-ups, fits a different build stage. Reading the stack, and matching your stage to the right rung, is what gets a deal funded cleanly.
Key takeaway: fund the stage you are at, match it to the right rung of the stack, and bring current numbers so the lender can say yes faster.Frequently Asked Questions
Construction lenders going into FY27 are funding selectively rather than shutting the door: appetite has shifted, not closed. Banks have tightened on speculative, presale-light builds, while non-bank and specialist funders have widened their books across the stack. The facility that fits depends on your build stage, from a commercial property loan on a finished asset to development finance on a live build.
Non-bank lenders do fund construction when banks pull back, and going into FY27 they are taking a larger share of the stack. Specialist and non-bank funders often have appetite for deals a major bank declines, particularly thinner-equity or faster-moving builds. The trade-off is usually pricing and term, which is why reading construction finance as a stack, not a single product, matters.
Presales are still the swing factor on development finance in FY27, but they are not always a hard gate. Some specialist funders will look at a build with light or no presales where equity and the exit are strong, as our note on development finance without presales explains. The fewer the presales, the more the lender leans on your equity and a documented exit.
A commercial property loan and development finance fund different stages of the same journey. A commercial property loan sits against a finished, income-producing asset, while development finance funds the construction itself and is drawn in stages. Our builder's comparison sets out which one fits where.
A caveat loan can cover a short funding gap during a build, provided there is a clear exit to repay it. A caveat loan is fast, second-ranking security that suits a brief, well-defined gap rather than primary build funding, and the second mortgage versus caveat comparison shows when each is the better tool. Without a documented exit, most lenders will pass.
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