Dear Investor

It has been 8 weeks since the last e-newsletter and what a time that has been.  I managed to have a holiday in August which was fun and then came back to what has been termed the “credit crunch.”  Ben Bernanke at the Federal Reserve made his first counter-attack by cutting the discount rate by 50bps (0.5%) which had the effect of pushing the Dow Jones up by 600 points and bankrupting a few options traders in the process.  Last week, he cut the target Fed funds rate (base rate) by 50bps as well as another 50bps cut in the discount rate.

In the UK, Northern Rock has been rocked after it emerged that the bank went to the “lender of last resort” for a loan.  Stockmarkets remain volatile and interest rate expectations have been revised considerably.

The Jet-to-Let Magazine conference at the beginning of September was a huge success and I thank all of you who attended for your support.  It was an action packed day with excellent guest speakers and we will announce the date for next year shortly. 

I also had a meeting with ITV to discuss a proposal they made to me and I also had a meeting with my publisher about a new series of short books.

Pausing for breath, I have just left Cyprus after finalising the release of my 5* Spa Resort and very pleased to receive a very positive bank valuation of the project and prices.  I have written about the scheme in the latest edition of the magazine which you should have received at the start of the week.  If you would like further information about The Grove Spa Resort, Mazotos then please e-mail me direct at dominic@jet-to-let-magazine.com  Marketing brochures, financial summaries and the scheme website will be available next week.

I flew back to London last weekend and then flew to France the following day to look at a project.  I am now back in time to run a Bewarethesharks.com “Fundamentals of Property Investment” course on Saturday 29th September and will show how a sub-prime credit crunch can work to your advantage.  I am then flying to Berlin the next day for a series of meetings and then back to London for some filming with ITV.

The magazine is going from strength to strength and again I thank you for your kind words and suggestions.  I also welcome Moneycorp as a principal sponsor of the magazine and look forward to the company’s continuing professional support of our foreign exchange needs, both personally and as a Group.

I would also like to welcome Henry Powell-Jones to the team.  Until recently he was a Captain in the British Army and served in operational theatres around the globe.  He speaks a number of foreign languages, including Arabic.  Henry joins the Group as Business Development Manager.

Additionally, Mark Perryman has joined the development company and is based in the main office in Cyprus.  Mark has a wealth of property experience and he is a welcome addition to the Cyprus operation.

We will be back to the normal schedule of e-newsletters next week.  In the meantime have an enjoyable weekend.

Best wishes

House prices have gone against most expectations and recorded another increase for September.

However, the report carried out by Nationwide revealed that the rate of growth was much slower than recent months; house price growth is now at the lowest level since July 2006.

Nationwide’s chief economist, Fionnuala Earley said that the tightening of credit controls as a result of the fallout from the sub prime mortgage sector; “The financial turmoil that began in early August and extended into September, dampening hopes that the uncertainty sparked by the crisis would blow over quickly. Higher wholesale funding costs are now clearly leading to an assessment of the pricing of credit in the mortgage market. As expected, this has not had an immediate impact on house prices, but the longer term effect will undoubtedly take some of the froth out of the market.”

Nationwide did have a positive outlook for mainstream borrowers.
The cost of fixed-rate mortgages has been falling for the past two months, and in recent weeks the chance of another interest rate rise has diminished.
While at the start of August commentators were predicting the Bank of England base rate could reach 6% before the end of the year, many are now suggesting it has peaked at 5.75%.

"This implies that for mainstream borrowers with good credit quality and lower loan-to-values (LTVs), credit conditions have not deteriorated as much as the headlines may suggest," said Ms Earley. "It also suggests that payment shock for borrowers who need to remortgage in 2008 may not be quite as large as previously anticipated.
"Although many lenders are now increasing margins, it is reasonable to assume that at least some of the decrease in swap rates will be reflected in fixed rate mortgage pricing," she added.

Source: Nationwide

The Council of Mortgage Lenders was ‘encouraged’ by the results of the Bank of England's credit conditions survey. The survey drew some noticeable positive conclusions.

The bank found that defaults on secured loans over the past three months were lower than lenders had anticipated they would be; lenders generally expect the availability of secured credit to remain about the same, and the demand for it to increase, over the next three months.

Lenders are broadly anticipating the demand for house purchase lending to strengthen in the prime sector, but a small proportion of lenders anticipate demand reducing in the buy-to-let sector, and a more substantial proportion expect demand for ‘other’ house purchase lending to reduce. 

Michael Coogan, CML Director General, commented “Although this survey was undertaken before the Northern Rock situation emerged, the funding constraints arising from the slowdown in the interbank lending market were already apparent.” 

“Against this backdrop, it is encouraging to see that the lenders contributing to the Bank survey largely expect the supply of mortgage lending to hold up.” Mr Coogan concluded.

Source: CML

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