Mortgage lenders have fattened their profits by failing to pass on the benefits of lower interest rates to consumers. In fact, they have doubled their profit margin on loans over the past two years, according to a Goodbody Stockbrokers' report Safe as Houses.

The report found that mortgage lenders' profit margins, or spread, increased by between 1.45 per cent and 1.6 since December 1997, while deposit spreads have tightened up by 3 per cent. A spread is the difference between what a bank charges depositors and borrowers. Other industry sources say some lenders' profit margins may be higher as it is common practice for banks to borrow at 2.5 per cent while charging home owners 5.25 per cent.