Economic Backdrop and Financial Performance Objectives

Legislation and policies - promoting a healthy Canadian housing market July 2020 CMHC ■ Minimum credit score for CMHC insured mortgages raised from 600 to 680 Gross debt service ratio reduced to 35%; total debt service ratio reduced to 42% to qualify for CMHC insured mortgage CMHC tightened rules on admissible down payment sources February 2018 - Government of British Columbia ■ The BC government introduced a 30-point plan to address housing affordability issues. It included a new speculation tax (2% of assessed value) on homeowners who do not pay income tax in the province and increased the foreign buyer tax to 20% from 15% January 2018 - OSFI Qualifying rate for uninsured mortgages raised to 2 percentage points above the contract rate or the five-year posted rate, whichever is higher April 2017 Government of Ontario ■ Introduced the 'Fair Housing Plan': 16 measures to address risks in the housing market including a 15% speculation tax on non-residents purchasing homes in the Greater Golden Horseshoe region January 2017 - City of Vancouver ■ Vancouver introduced a tax of 1% of the assessed value of each home which is vacant (principal residence is exempt) October 2016 – Department of Finance ■ Qualifying rate for high-ratio mortgages with a term of five years or more is changed to the 5-year posted rate Portfolio-insured low-ratio mortgage loans must meet the eligibility criteria of high-ratio insured mortgage ■ A principal residence sale must be reported in the seller's tax return, even if any capital gain is protected by the principal residence exemption July-August 2016 - OSFI & the Government of British Columbia ☐ OSFI increased scrutiny on mortgage underwriting standards: greater emphasis on internal controls, risk management practices and market developments BC government introduced a property transfer tax of 15% on foreign buyers registering the purchase of a home in Metro Vancouver 46 | CANADIAN HOUSING MARKET RBC

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