Mortgage Funds are still suffering redemptions pressure, with investors subject to withdrawal restrictions on formerly frozen funds, ratings agency Standard & Poor's said today.

The research house said funds in its Australian Fixed Interest - Mortgages peer group were experiencing more outflows than inflows.

The funds had all continued to deliver monthly income distributions and capital stability but most restricted investor's ability to withdraw in some way, S&P said in its latest sector report, released today.

Peter Ward, fund services analyst for S&P, said it was a hangover from the global financial crisis.

"The saga started in 2008 ... it's a carry over from that period," he said.

While some investors wanted to stay in the mortgage funds others wanted to redeem their money and that put pressure on managers to juggle competing interests.

"They offer limited liquidity to people to redeem when liquidity is available," he said.

"But they are also trying to maintain performance."

The sector review assessed six conventional mortgage fund products, two hybrid funds and one high-yield mortgage fund.

It found that a fund's performance is linked to its capacity to lend. It said the lending environment is less competitive than before the financial crisis, and that terms were more conservative and margins higher.

But higher redemptions limit a funds ability to lend which limits their performance, Ward said.

If a fund could not lend its ability to re-price its portfolio was restricted.

The review found that portfolio credit was patchy with some funds reporting a deterioration and some an improvement.

Of the nine funds analysed in the sector review, six of them still restrict redemptions and most experienced freezes in 2008 at the height of the financial crisis.