INVESTORS Investor Newsletters
Company Profile
Deposit Rates
Investor Newsletters
Product Disclosure Stmt
How to Invest
Company Directory

Contact us
Switch to Borrowers

Investor Newsletter - June 2009

Welcome to our June 2009 General Finance quarterly newsletter. We appreciate your support. The purpose of this newsletter is to keep you informed about the company and various financial matters that may interest you.

Our Current Lending Style
As discussed in our last newsletter our lending is becoming more focused on first mortgages, rather than on seconds. Our preferred sector is the bridging finance area where borrowers are looking for short term assistance.  Often these borrowers require short term finance if they have bought a second property but they have not sold or settled on their original property. Others may be wanting additional short term finance to fund a specific project, such as subdividing their property, or to undertake renovations. The banks are not keen on this business due to its short-term nature and the high cost of set up.  However these types of loans are ideal for smaller players such as us, with our much lower cost structure.   Loan to value ratios for new lending are currently restricted to 70% for first mortgages and 65% for second mortgages with adjustments made for geographical region.  The weighted average LVR is 57%.

Our Market is Different to the USA
Anyone watching the international news will be aware that the United States property market is facing a steady decline in values, with falling turnover and an increasing number of foreclosures. While our market is very much in a negative phase, it is quite different to the US market. We did not have the considerable sub prime market where those with quite poor credit histories could easily obtain 100% funding on their properties. Our sub prime market did exist, but it was small by comparison. Our interest rates over the past three years were high, by world standards, whereas the US market during this period had much lower interest rates, with many low “honeymoon” style rates being offered as well. These lower rates allowed many more people to qualify for loans who would not have qualified in this country. We do not have an over supply of houses as they do in the US - this is a major factor in driving property prices lower there. Mortgage rates in the US have been relatively low for a quite a while – whereas ours have not, and so our recent substantial falls are having a positive impact on housing affordability. In many ways we are better placed in this country.

Interest Rate Update
At the end of April the Reserve Bank lowered the Official Cash Rate from 3.0% to 2.5% which is not good news for investors. We believe interest rate cuts by the Reserve Bank are nearing their bottom.  This was evidenced last week (11 June 2009) when the Governor left the OCR unchanged and commented, “…we expect to keep the OCR at or below the current level through until the latter part of 2010”.  Unusually, we have a lower Official Cash Rate than Australia where it is currently at 3.0%. We believe interest rate levels will be market driven and in the medium they are likely to rise. Any improvement in the economy will reinforce this. 

Next Interest Payment 
Our next quarterly interest payment will be made on the evening of Tuesday 30 June 2009. Direct credits will go in that evening, with cheques (if applicable) and paperwork being forwarded during the week.

If you have any questions about your investment please do not hesitate to contact me on 09 526 7801 or by email to  Our website is a       

If you want to invest more funds, you can obtain an investment statement and application form from our securities registrar.  Their number is 0800 500 602.

Your continued support is appreciated.