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Canterbury Mortgage halts withdrawals as reserves dwindle

Tuesday 22nd July 2008

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Canterbury Mortgage Finance suspended withdrawals until at least March next year after an "unprecedented" number of requests for withdrawals.

"If the level of withdrawal requests had continued, then our cash reserves would soon be insufficient," trust spokesman Don McBeath said in a statement.

The NZ$250 million fund still plans to make its quarterly interest payment due on October 1, though "it is likely the return will be less than we have previously been able to pay."

Canterbury Mortgage, started nine years ago, typically holds cash equivalent to 5% to 10% of the value of the fund, with most of its investors' money in about 300 mainly short-term loans secured by first mortgages.

The failure of high-profile finance companies had eroded confidence in the sector and probably contributed to the increase in withdrawal requests, the company said.

By Jonathan Underhill

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