Investor Presentaiton

NEW ZEALAND HOME LOANS SUMMARY OF MACRO PRUDENTIAL CHANGES¹ Restrictions on loan-to-value ratios (LVRs) are limits on banks to reduce the amount of low deposit mortgage lending. Below are the changes to the LVR restrictions during the year, excludes exemptions for new builds, remediation, Kainga Ora, bridging loans and refinancing. 1. LVR restrictions From 1 March 2021 。 LVR restrictions for owner-occupiers reinstated to a maximum of 20% of new lending at LVRS above 80% 。 LVR restrictions for investors reinstated to a maximum of 5% of new lending at LVRS above 70% From 1 May 2021 。 LVR restrictions for investors further raised to a maximum of 5% of new lending at LVRs above 60% From 1 November 2021 。 LVR restrictions for owner-occupiers revised to a maximum of 10% of new lending at LVRs above 80% 2. Regulators are also proposing further changes to home lending which may include introducing debt to income thresholds, or another serviceability tool. SUMMARY OF MACRO PRUDENTIAL CHANGES² • Bright-line changes The Government extended the bright-line property rule from 5 to 10 years for residential property acquired on or after 27 March 2021. This bright-line rule has gradually extended over time from initially 2 years from 1 October 2015, then 5 years from 29 March 2018 and now 10 years from 27 March 2021. Under the extended bright-line rule, if residential property is sold within 10 years of acquisition, income tax may be payable on any gain Exemptions from the 10 year bright-line test include new builds (albeit still subject to the previous 5 year bright-line test), inherited properties and the owner's main home Interest deductibility 1. Interest deductibility for tax purposes on a mortgage on a residential investment property (acquired before 27 March 2021) will be gradually phased out between 1 October 2021 and 31 March 2025. For residential investment properties purchased after 27 March 2021, interest would immediately cease to be deductible from 1 October 2021 Exemptions for property developers and for owners of new builds exist, allowing full deduction of interest Source: RBNZ; 2. Source: IRD; 3. Source: ANZ, REINZ HOUSE PRICE CHANGES BY LOCATION3 Annual % change (3-mth average) 45 40 35 30 25 20 20 15 10 5 O -5 Mar Sep- Mar- Sep- Mar- Sep- Mar- Sep- Mar- Sep- 17 17 18 18 19 19 20 20 21 21 Auckland -90 Wellington Canterbury - NZ ANZ 112

View entire presentation