22 Jul 2008

Finance company freezes $250m till March

3:28 pm on 22 July 2008

Another finance company, Canterbury Mortgage Trust, is taking action to avoid defaulting on payments, putting a freeze on $250 million of investors' money.

About 5000 mainly "mum and dad" investors will not be able to withdraw any money from the property lender until at least March next year.

The $250 million is tied up in about 300 mortgages spread over a mix of residential, commercial and rural properties.

Canterbury Mortgage Trust says withdrawal requests from investors, nervous about the financial sector, were sucking cash reserves dry at an alarming rate.

The company says quarterly interest payment due on 1 October will still be met, but it is unlikely to match the 9% paid on 1 June.