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Bankers reveal Merlin is losing its magic

Figures released by the British Bankers Association (BBA) show that the Government initiative to persuade the UK’s top 5 banks to lend more to small businesses is not working and investors looking to expand and take out commercial property insurance on more properties, are being frustrated by the lack of funding available.

Poorest April for some time

The BBA figures showed that lending for house purchases dropped below 30,000 in April, which is a fifth lower than the same month last year and the lowest in the month of April for over 15 years. This amply illustrates the problem that home seekers and residential landlords are facing in trying to access funding from the banks. There are those in the sector that are putting the poor figures down to the number of Bank holidays which occurred last month, but it doesn’t hide the fact that the Banks do not seem to be serving anyone well except themselves at the current time.

Banks falling short

The BBA figures also show that in the first quarter of 2011 Project Merlin, the name given to the plan to aid small and medium sized businesses is in danger of becoming as much as a fable as the character from whence the name came. Currently the big 5 banks, Santander, HSBC, RBS, Lloyds and Barclays are falling short of the figure by £25 million a day!

Cable watching the situation

The banks still insist that the cash is available but the businesses wanting a share, are not, but the business Secretary Vince Cable is amongst those not impressed by the argument and has let it be known that the architects of Merlin need to devise a more magical way of loosening their purse strings.

Landlords benefitting from loan shortage

Of course for those landlords in the business already, the lack of action by the banks is drawing more and more people into the rental market and is the reason why rents are almost at record levels. Many landlords now report they can charge £400 just for a room in some parts of the country. Those lucky enough to have the wherewithal to find the cash to put down a sizeable deposit are still finding plenty of properties on the market that are crying out to be covered by landlord property insurance, and still at a bargain price. The current situation suggests that property investment by landlords who can afford it will still pay dividends for some time yet.