Speaking at a think-in of his parliamentary colleagues, the PD leader announced that stamp duty reform would be a key part of his party's reelection campaign. The unfortunate timing of these remarks, which came just as the autumn house buying season was getting into full swing, has been well documented. However, not only were they inauspiciously timed, it could be argued that the Tanaiste's comments were also misdirected.

The debate initiated by McDowell focused exclusively on the stamp duty levied on house purchases. However, no attention was given to stamp duty on the mortgages that finance those purchases.

Eradication of this admittedly rather obscure stamp duty has arguably even more potential to relieve housing affordability problems than tinkering with stamp duty on houses themselves.

A stamp duty of 0.1% is levied on new mortgages of over 254,000, subject to a cap at 630,000. This means that borrowers taking on mortgages above the lower threshold face a stamp duty bill of between 254 and 630.

For house buyers this is more of an annoyance than a major obstacle, as the money involved is trivial in comparison to the purchase price, especially when spread over the lifetime of the mortgage.

However, for existing borrowers who want to shop around for the best value, it is a different story. Despite the fact that they may already have paid stamp duty on their existing loans, 'switchers' could face a tax of up to 630 just for moving their business to a more competitive lender.

Having to pay on the double is grossly unfair. But, worse than this, a stamp duty on mortgage switching is clearly anti-competitive. It creates an inertia which allows expensive lenders to retain business despite the availability of cheaper . . .sometimes much cheaper . . .mortgages.

To illustrate this point, consider the gap that still exists between the cheapest and most costly lenders for a mortgage of 209,298 . . .today's average new loan amount . Assuming the average loan-to-value (LTV) ratio of 55% , and factoring in last Thursday's quarter-point increase in base rates, the lowest APR available in the market, ignoring introductory discounted offers, is 4.10%.

Over 25 years, the monthly repayments on this tracker product would be 1105.80.

In contrast, comparable tracker rates in this LTV bracket can be as high as 4.75%. At this end of the scale, monthly repayments would be 1193.24 . . . a difference of 87.44 per month, and a staggering 26,232 over the lifetime of the loan.

The fact that stamp duty on mortgages appears modest at 0.1%, and that, in any given year, relatively few people are directly affected by it should not detract from the key point.

If it were not for this stamp duty and other barriers to competition, erosion of banking margins could bring mortgage rates down for all of us.

Given the energy that has been expended on discussing ECB base rates, it is surprising that so little attention has been paid to the role that a more competitive mortgage sector could play in reducing the cost of home loans. And with housing affordability supposedly top of the public policy agenda, it is particularly frustrating that the government continues to block competition with this unfair tax on switching between lenders.

Hendrix once said "Blues is easy to play but hard to feel".

Tell that to the short-changed Irish home-owner.

Dr John McCartney is chief economist with estate agents Lisney