Investor Newsletter - March 2009

Welcome to our March 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 a result of continuing changes in the financial markets, General Finance is shifting its emphasis from being a second mortgage lender on residential housing assets to more of a first mortgage lender. The reasons for this are two-fold; firstly, we are wishing to improve the quality of our security and secondly, we are finding that with the banks tightening their lending criteria and with fewer competitors in our space, we are sourcing more first mortgage enquiries. We will continue to lend only on residential housing assets, as we consider this safer than commercial and rural lending. We believe that, going forward, more of our loans will become building society type loans rather than finance company lending. We will keep you informed with our progress.

House Prices - What is Happening?
According to Quotable Value, over the past 12 months, house prices have declined an average of 8.9% across the country. Auckland had a 9.4% decline, Wellington 9.3% - the brighter spots being New Plymouth declining 6.6% and Nelson 7.3%.  The average time it takes to sell a property is now 59 days - well up on 30 days three years ago. These figures are gloomy but as we are talking to a number of real estate agents and valuers on a regular basis, a slightly different picture is emerging. Agents tell us that enquiries are up and the recent drop in interest rates appears to be starting to have an effect. Investors are noticing that many more properties are now cash flow positive, and for home buyers, affordability has improved.  This upturn in confidence was noticed in the February figures with 40% more houses being sold in that month than in the somewhat quiet January. We really have to wait for the March and April figures to see if an upward trend is emerging.  The figures last month were the first hint of something positive in the housing sector for over a year. 

Current Deposit Rates for Investors
Currently our deposit rates are one of the lowest within the finance company sector. We have received a number of investments over the past few months and as a result we are sitting on large cash reserves relative to our size.  As discussed above we have adopted a conservative lending criteria so we are actually declining more loans than we are approving. Our rates will stay relatively low until we have advanced most of our cash. Depending on the state of the markets and our lending volumes we will then be seeking more investments, and so at this stage our rates will have to rise.

Next Interest Payment 
Our next quarterly interest payment will be made on the evening of Tuesday 31 March 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 wcairns@general.co.nz  Our website is a www.general.co.nz.       

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.