Irish mortgage lenders will watch nervously as the British Chancellor of the Exchequer, Mr Gordon Brown, is expected to threaten their British peers over their failure to fully pass on interest rate reductions in recent months.

A consultation paper is forecast to include obligations on mortgage rates, which will be backed up by legislation if lenders prove unwilling to co-operate.

As the powers that be tussle over the right to defend the consumers' interest on regulation of the financial services sector in the Republic, borrowers will be hoping that similar action might be forthcoming here where lenders have regularly refused to pass on the full effect on interest rate reductions, arguing that to do so would hurt savers.

With profit margins wider than their peers in Europe, what would effectively be squeezed by forcing the banks to be fair to lenders would be their profits and not savers' returns.