Decision time has arrived for thousands of commercial property investors around the State - whether to fix their loans or ride the variable tiger for another few months.

A consensus is emerging among Europe's bankers and on the markets that interest rates have bottomed out or are close to bottoming out. But how close nobody seems to know, which means crystal ball gazing will be a popular activity in the coming months.

On the one hand, the news that the European Commission will cut its 1999 euro zone growth forecast to near two per cent, may have paved the way for the European Central Bank to justify another rate cut if it wants. This has given confidence to those who believe there may be another half a per cent left to fall in rates.

However, on the other hand, stable inflation data, higher oil prices and clear resistance from many ECB council members indicate that a cut may not happen.

Whatever about the arguments in Frankfurt, according to some of the leading commercial property lenders, most investors have already made up their minds.

Noel Griffin, head of treasury at Equity Bank, the specialist property lender, says the vast majority of investors are deciding to fix their loans.

"Anyone hanging around for another quarter of a per cent is foolish," he says. Even if investors lock in now and the rate drops one more time, they will only lose 0.25 per cent at most, he says. "Even when you take the worst case scenario, the figures are fairly modest in the overall scheme. And then, of course, rates could go up by one per cent just as easily," he adds.

The decision whether to lock in or have another throw of the interest rate dice is not something investors normally enjoy confronting, he says. One way to avoid having to put all your eggs in a single basket is to split the loan, with, say, one-third fixed and the rest variable or half and half.

"If you fix your loan, there is still flexibility because there are various fixed options available - one year, three months, three years and so on," he says.

Like all lenders, he says one of the most important factors is when the investor intends to sell the property. "If you intend to sell the property in a few years, then you should consider going variable, otherwise you will get hammered by the penalty clauses included as part of a fixed deal," he says.

This advice is supported by John Crowe, financial adviser with management consultants KPMG, who deals with large numbers of commercial property investors. "Anyone selling in the near future should be careful about taking on a long-term fixed loan and this is particularly the case when there is a consortium involved," he says.

This is because members of consortiums, due to changes in their own financial circumstances, can decide they want to sell the property sometime before the fixed loan is up and then everyone gets punished.

Mr Griffin says the strong yields at present in the commercial market means investors are reluctant to take any steps which might restrain the revenue flow. "People are making money and do not want any impediment to this, but things like Kosovo are in the background and there will be no great warning when rates go up," he says.

Jackie Gilroy, general manager of property finance at EBS, suggests that clients whose cover is tight should fix their loan. "If you have a good bit of cover from your properties, then you can afford to take the gamble," she says.

She points out that fixed rates at present are hovering around 5 per cent and the variable rate is often not much beneath that. "Investors have to ask themselves is the difference worth the risk," she says.

Mr Crowe says it is. "If there is a chance of getting 0.5 per cent, why not take it," he argues. "No one can be sure but I think there is a good chance they will drop down again," he says.

Rent reviews are also an important factor, Ms Gilroy adds. "If a rent review is due in about a year, then it might be an idea to fix until then and then consider the options," she says.

THE quality of the tenant is also important - if an investor is confident of the rental income staying well above the interest bill, then variable loans may well be the right choice.

But predicting what will happen to your rent depends on the existing tenant and the chance of getting another one at short notice.

Liam Lenehan, from commercial division of the Hamilton Osborne King estate agency, says with banks increasingly prepared to offer non-recourse lending (where the investor in not personally liable for outstanding debt), the fixed option becomes more popular. "Many lenders will say there is enough risk in offering a non-recourse deal without adding to it by going with a variable loan," he says.

However, the portfolio of the investor should influence the decision too, he says. "Investors with very large portfolios are better able to spread their risk and can offset gains against losses on several different loans."

He estimates that 75 per cent of investors are currently locking in their rates. He says the option of splitting the loan into variable and fixed was popular some months ago as rates were falling in the wake of the euro, but adds that 100 per cent fixed is now the most popular choice.

Paul Coghlan, of Financial Planning Strategies, a independent advisory firm, says going variable might be more suited to those dipping their toes in the UK market. "With Britain likely to join the euro, there would seem to be a fair bit of value left in rates there," he says.