Australian Housing Dynamics and Affordability

AUSTRALIA HOME LOANS UNDERWRITING PRACTICES AND POLICY CHANGES¹ Quality assurance, info verification & policy reviews Multiple checks during origination process • End-to-end home lending responsibility managed within ANZ Effective hardship & collections processes Pre-application² Income & Expenses • Full recourse lending Application Know Your Customer Serviceability Income Verification Income Shading Expense Models Interest Rate Buffer Repayment Sensitisation Collateral / Valuations Credit Assessment Fulfilment • ANZ assessment process across all channels Serviceability Aug'15 Apr'16 Jul'19 Interest rate floor applied to new and existing mortgage lending introduced at 7.25% Introduction of an income adjusted living expense floor (HEM*) Introduction of a 20% haircut for overtime and commission income Increased income discount factor for residential rental income from 20% to 25% Enhanced Responsible Lending processes including additional enquiry and increase in minimum monthly credit card expense Increase of interest rate buffer to 2.50% and reduction of interest rate floor to 5.50% *The HEM benchmark is developed by the Melbourne Institute of Applied Economic and Social Research ('Melbourne Institute'), based on a survey of the spending habits of Australian families. LVR Policy LMI Policy Valuations Policy Nov'18 Credit History Bureau Checks Documentation Security 1. 2015 to 2019 material changes to lending standards and underwriting Customers have the ability to assess their capacity to borrow on ANZ tools 2. ANZ 93

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