Mortgages intentionally left out of Project Merlin

Mortgage lending was deliberately left out of Project Merlin talks on lending because it is not seen as a major problem, says Tony Ward, managing director of Home Funding.

Under Project Merlin plans rev-ealed last week, banks will increase lending to businesses from £179bn to £190bn. Ward says there is not the same concern over mortgages.

He says: “Everything screams that the Bank of England wants to see a deleveraging of finance in the housing market because it feels house prices are still in a bubble.

“Mortgages have not been for-gotten from these talks, they have been left out intentionally.”

Mehrdad Yousefi, industry consultant, says it would have been hard to include mortgages in the talks because lenders still require large deposits from borrowers and it would be hard to set lending targets.

But he says: “Project Merlin is a step in the right direction. I would liked to have seen the target doubled but there is no money in the system at the moment.”

A Council of Mortgage Lenders spokeswoman says: “The CML was not a party to Project Merlin.

“The constraints around mort-gage finance and mortgage lending are well known but this topic was clearly not part of those discussions.”