Colonial First State, Australia’s biggest fund manager, suspended redemptions from its mortgage funds on Monday. The decision by the Commonwealth Bank of Australia unit, which had A$3.3 bn in mortgage funds at the end of September, lifts the total frozen by such funds to A$24 bn.

Late last week, a clutch of fund managers, including Challenger Howard, Perpetual and Axa Asia Pacific, stopped withdrawals from mortgage and cash management funds in the wake of a surge in withdrawals as investors switched into government-backed deposits.

More than a dozen of Australia’s biggest fund managers have now frozen redemptions amid warnings that the government deposit scheme could have long-term implications for an industry that had previously helped provide the mortgage market with liquidity.

This highlights some of the unintended consequences of a blanket three-year guarantee on Australian deposits that was introduced two weeks ago.