As if the media and other commentators weren’t going to give the Finance Minister a tough enough time for not encouraging, or forcing, sufficient downward movement on the part of the main banks in terms of standard variable mortgage rates, up pops the Taoiseach in the Dail yesterday to express his own frustration with the banks and to state that “the current situation was not morally justifiable.”

Strong words indeed: and language with which most reasonable people would find it hard to disagree.  But it certainly ups the ante on his Finance Minister to use more than verbal persuasion with the various financial institutions prior to October’s budget unless they show a greater appetite to cut rates again.

Part of Noonan’s problem, exacerbated by his senior colleague’s statement yesterday, has been self-generated. His particular brand of no-nonsense, tough talking gave the impression that he would immediately pull thunderbolts from the clouds on the banks if they had not acceded to his directive by the imposed deadline of July 1st. 

As it transpired, only Permanent TSB made any announcement about further intended standard variable rate mortgage reductions on the day and night fell without any verbal response or indeed action on the part of the Limerick man.

Perhaps he is understandably fatigued by the frequent recent trips to Brussels  to try to resolve the Greek situation; perhaps he’s busy finalising this week’s half year Exchequer returns and will turn his attention to the banks immediately afterwards: or perhaps, he realises he over-promised on the amount of movement he expected from the banks and the level of retribution that would be triggered if they refused to comply sufficiently. 

Methinks the latter. Certainly, sources within the Department were anxious to point out that yesterday’s date did not necessarily represent a deadline for further announced cuts by all the banks, but the end of a two month period over which their actions generally would be reviewed.  And each of the main institutions has announced some reductions during that period, even if most look insufficient, some look highly complex and qualified, and if Bank of Ireland stuck resolutely to its guns and declined to cut variable rates at all.

The same sources also pointed out, validly, that while certain commentators have suggested that reductions in fixed mortgage rates, by the likes of Bank of Ireland, represent a form of smoke and mirrors trick which doesn’t offer any real lower cost option for variable mortgage holders, this is not actually the case. 

Whatever about the morality of currently charging a 4.5% standard variable mortgage rate, the facility to switch to a three-year fixed option of 3.7% or 3.8%, and to switch back, if desired, to the prevailing standard variable in three years time, does involve a savings opportunity for the lender.

Perhaps, amongst their other failings, the banks aren’t selling this message strongly enough to their customers; another issue the Minister can take up with them in his planned round of further bi-lateral meetings.

Next time of course he’ll also have a bigger stick, specially sharpened by the Taoiseach.