Santander to delay property fund repayments for two years

The housing market in Spain has taken anther blow this morning with the news that Santander bank, Spain's largest mortgage lender, has applied for permission to suspend repayments to investors of it's Santander Banif Inmobiliario fund.

Santander has invested in thousands of properties that are rented and the fund has a combined value of 3.2 billion Euros. Investors who are dealing with the current financial crisis had asked to withdraw their funds.

Under Spanish law, if a fund receives requests for withdrawal totaling more than 10% of the funds value they are able to apply to the government for a halt to repayments until liquidity levels are restored. The recent window for withdrawals that closed on 13th February saw requests for withdrawals at 80% of the funds value.

Today's announcement effectively means that 42,300 Santander investors will now need to wait 2 years before being able to withdraw funds, although this has no effect on the properties owned by the fund. Find out more about mortgages in Spain.