Spain has officially requested an EU bailout worth 39.5bn euro for four of its struggling banks.
Almost all of the money will go to the nationalised Bankia, Catalunya Banc, NCG Banco and Banco de Valencia.
The European Commission approved plans to release the capital to the beleaguered sector which suffered heavy losses on loans to home buyers and property developers when its property bubble burst.
In September official figures from the Bank of Spain showed that 10.7% of total banks' balance sheets were made up of "doubtful debtors", those whose loans may not be repaid.
From July to September 29.7% of all bankruptcies were companies in the construction sector. But as millions of homes lie empty or unfinished, more than 350,000 people have been evicted since the 2008 property crash.
A 53-year old former socialist councillor Amaia Egana threw herself from her fourth-floor flat near Bilbao when the threat of repossession became too much and the owner of a newsagent in La Chana near Granada hanged himself a few hours before he was due to be evicted.
A local pharmacist who knew the man told Sky News: "There are many people without jobs. People can't pay for their flats and the banks want to evict people from their homes onto the streets.
"People are asking where do we go if we don't have houses."
But campaigners fear foreclosures already under way will still go ahead. Ada Colau, a spokesperson for PAH, a pressure group for those affected told a local paper: "The moratorium will not help the hundreds of thousands of families who have foreclosure proceedings against them already under way."
Halting repossessions is bad news for the already flailing banking sector. Last week ratings agency Moody's said banks' financial positions would be weakened by the concessions.
And this may continue to impact how much banks can support local businesses which are key to the country's recovery, forcing them to borrow from elsewhere.
Fernando Cara Ruiz, a hair salon owner in Granada told Sky News: "We're having to put more and more on credit because the banks can't give us money.
"Things are very slow so we have to reinvent ourselves and think to tomorrow, not to today."
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