The governor of the Central Bank said last week interest rates will not be falling any further. Given one-month money rates have fallen to just 2.5 per cent over the past six months, this is hardly surprising, although some analyst say the really bad economic news from Germany may force yet more cuts.

But given that the Irish governor, Maurice O'Connell, and his French counterpart, Jean-Claude Trichet, are both saying there will be no more cuts, it must be a reasonable time to think about taking out a fixed-rate mortgage.

One-month DIBOR, the money market interest rate which is traditionally used for setting variable rate mortgages, averaged 10.3 per cent in 1993. By last year, it had almost halved to just 5.75 per cent. That was a traditionally very low average for this country, where high levels of inflation have often resulted in much higher rates. The rate now stands at 2.75 per cent - its lowest level. There has been an equally sharp fall in wholesale fixed rates. In early 1995, Irish five-year and 10-year bond yields, which are used to set the longer fixed-rate mortgages were trading around 9 per cent. By the end of last year they had fallen to around 4 per cent. These sorts of rates would have been thought of as almost impossible only three or four years ago and mean that borrowers are finding it easier to support bigger and bigger mortgages.

In circumstances such as this, it would nearly always be best advice to take out a fixed-rate mortgage as insurance against future rate rises. After all, with rates so low and the governor saying they will not go lower, what is the risk? But still the majority of borrowers are opting for variable loans and often a one-year fixed. But that is such a short time period that it may as well be variable loan. And there may be some sense to this for a number of reasons.

One is the very large margin which Irish banks and building societies still charge on loans. They, of course, repeatedly point to the commitments they have to savers and while this may be partly the case, lenders in other European countries must also pay some sort of a return to savers.

Because of this, many people expect a major UK or Continental lender to step into the market and, by taking a much smaller margin, win huge amounts of business. That, in itself, would drive rates down across the board and thus it may be better to wait for this than to lock in for an extended period now.

The other reason for still opting for variable rates is the belief that while rates may rise, it is unlikely to be by much and they may also fall again.

This means that simply by joining the euro, not only have rates halved but also they are likely to stay low for an extended period. Indeed, German rates have always been well below Irish rates. Even the cost of unification only drove German rates to just below 9 per cent, while Irish rates have hit 15 per cent in the past,

These reasons do have some validity. But there is another argument for fixing that is particularly relevant to those who have taken out large loans recently, and that is certainty. The larger the loan, the bigger the rise if interest rates rise. And most analysts would agree that anyone who could possibly face repayment difficulties if interest rates were to rise should certainly be thinking about a longer term fixed loan.

Brokers also report that some institutions are already insisting that borrowers taking out loans above Central Bank guidelines have to borrow at fixed rates. Five-year loans are available from about 5 per cent at AIB, Bank of Ireland and Ulster Bank, and 4.75 per cent at Irish Nationwide.

Longer term loans of 10 years are also fairly good value if you are fairly certain that your circumstances are unlikely to change hugely in the meantime. Nearly all of these are available at under 6 per cent with AIB among the cheapest at 5.75 per cent. Irish Permanent and TSB are much more expensive at 6.45 per cent and 6.25 per cent respectively.

Even a three-year loan can provide some measure of protection and these can be obtained at under 5 per cent. Irish Nationwide charges 4.75 per cent, Bank of Ireland offers a rate of 4.85 per cent, while EBS is 4.9 per cent. ICS and Irish Life both charge 4.99. But Irish Permanent, National Irish Bank and TSB are expensive at 5.3 per cent or above.

Given that there is no sign yet of an overseas competitor, and that rates may have bottomed out, those who choose to fix are certainly unlikely to lose out by much and could be buying substantial peace of mind.