David Prosser: So when will the cash trickle down to the rest of us?

Is someone telling porkies? The message Barclays and HSBC most wanted to get over loud and clear as they unveiled their bumper profits was that they have been increasing lending to mortgage borrowers and businesses.

Their banking rivals all say the same, yet would-be property purchasers and businesses claim they are being starved of credit.

The message is not a surprise. The banks, having been saved from meltdown by the taxpayer, are under huge pressure to ensure enough credit is available to pull Britain out of recession. The Government has threatened the industry with a competition inquiry should lending not increase.

However, it would be odd if banks weren't being cautious. We are in a recession that economists say was caused by overly liberal lending policies. The banks know that as people lose their jobs and the economy stagnates, many borrowers will find it harder to stay on top of repayments, so it's natural for them to rein back credit.

Also, part of the reason we have seen borrowing go down in both the property and business sectors is falling demand. In this economic environment, people are less inclined to take risks, so their appetite for credit shrinks.

Still, if you do want to borrow, you may be disappointed. It is true, for example, that both Barclays and HSBC have committed larger sums of money to mortgage lending this year. But that doesn't mean borrowers will necessarily find it easier to get a home loan.

The extra credit on offer from these banks has been offset by the withdrawal from the market of lenders that used to be big players in the mortgage sector – notably several foreign banks with UK arms.

Moreover, all but the most specialist of mortgage lenders are now being much more cautious about who is offered credit. At mainstream institutions, like the banks reporting their results this week, only a tiny number of mortgages are available to buyers who do not have a deposit of 10 per cent or more. So if you're a first-time buyer, say, you will probably find it harder to get mortgage finance now than you would have done three years ago. If you have any sort of adverse credit history, you will also struggle.

If you run a small or medium-sized business, even a healthy one, it is likely that your overdraft facility has been cut back over the past six months. Official statistics show a sharp contraction in lending to the business sector, with the credit extended to companies down by £9.4bn over the two months to the end of May alone, according to the Bank of England.

Almost everyone who applies for credit thinks of themselves as a good risk. But while some borrowers are deluding themselves – and banks quite rightly send them packing (or at least they do now) – the supply of lending has shrunk so much that some of those who would have no problems with repayments are missing out too. That's not good news for the housing market or for business.