Michael Noonan is set to meet with the country’s top bankers again on the topic of mortgage interest rates in the run up to the budget on October 13th.

The Minister for Finance will hold meetings with bank officials over the coming weeks following on from his meetings in May of this year.

Earlier this year Noonan had warned that banks could face punitive measure come budget time if they didn’t make progress with cutting mortgage rates for homeowners.

“The issue of a penal banking levy in the Budget or powers for the Central Banks to regulate interest rates will be considered at that time if sufficient progress is not made,” Minister Noonan warned.

The minister told the Dail at the time that bank officials had agreed to review their rates and come up with suggestions to deal with the issue by 1 July.

While some of the banks did make token interest cuts with over 300,000 people in Ireland on Standard Variable Rate mortgages, it could potentially become a hot election topic.

A standard variable rate mortgage loan, is a mortgage where the interest rates vary depending on market conditions. Cash strapped Irish banks jacked up the rates a a way of bolstering their revenues.

The comparatively high cost that tracker mortgages are having on Irish lenders indicates that high rates on SVR mortgates are being used to subside hit the banks are taking.

The standard variable rate mortgage rates in Ireland are still substantially higher than the European average. Market turmoil in China means that the banks could be particularly resistant to any coercion from the Department of Finance.

The rates remain out of step despite the fall in the wholesale cost of bank funding, meaning that banks have access to cheaper cash and haven’t passed on the savings to consumers.