Mortgage-holders look set to escape higher interest rates for another few months at least, following yesterday's decision by the European Central Bank (ECB) to keep rates on hold.
The ECB pointed to "increased uncertainty" in the global markets as a reason for maintaining its key rate at 4 per cent.
Jean-Claude Trichet, president of the ECB's governing council, said the market uncertainty had "augmented in a very significant fashion" and hinted that the bank would not increase rates next month either.
Some economists now believe that rates have reached the highest point in the current interest rate cycle, and are likely to remain steady for a lengthy period before starting to fall again.
Others are less convinced, however, predicting that rates could rise by another quarter percentage point before the end of this year - to reach 4.25 per cent.
Another increase would almost certainly be passed on by banks to their mortgage customers, who have experienced eight rate increases in less than two years.
Each quarter-point rise equates to an increase of about €35 in the monthly repayment on a €250,000 mortgage. Some homeowners with poor credit histories who hold subprime loans have faced greater increases.
Before this summer's problems in the global credit markets started to bite, the ECB had been expected to increase rates this month, with another hike anticipated before the end of the year.
It is now almost certain that the bank will await some resolution of the continuing market upheaval before committing itself to a new strategy on interest rates.
The ECB is also likely to seek further evidence of a positive economic outlook before settling on any new position.
In a carefully worded statement accompanying yesterday's rate decision, Mr Trichet indicated that rates would remain steady next month too, despite the ECB's concerns about inflation in the countries using the euro.
The ECB's opinion on inflation is usually the key driver behind its policies on interest rates, with Mr Trichet saying yesterday that the bank would "act in a firm and timely manner" if necessary.
Austin Hughes, chief economist with IIB Bank, said this suggested "the threat of a further hike will persist for some time".
He also said, however, that the future for mortgage-holders looks "a great deal brighter than it did in early August".
Economists at AIB said the outlook for rates was "clouded with uncertainty" but said the likeliest outcome was another quarter-point increase before the end of this year.
In contrast, David Tilson, head of trading at Bank of Ireland Global Markets, is convinced that rates will go no higher than the 4 per cent they reached in June.
Dermot O'Leary, chief economist at Goodbody Stockbrokers, said "the longer the pause, the less likely rates will have to go higher".
Mr O'Leary believes the most likely timing for another increase in the current cycle would be December.
"The main ingredient which is lacking is confidence," Mr Trichet told reporters at a news conference in Frankfurt.
He said the fundamental economic picture in Europe for this year and 2008 was positive, despite a slight reduction in the ECB's growth projections for the euro zone.
A shift in the ECB's policy stance on its main interest rate could help to support the Republic's housing market, which is displaying signs of weakness.
Figures released earlier this week showed that house prices fell by 3 per cent in the first seven months of the year, with separate data showing that declining property taxes have started to feed through into the public finances.
The ECB also sought to soothe the money markets yesterday by providing another €42 billion to help ease the flow of money around the global financial system. It took a similar step three weeks ago.
Mr Trichet said the bank would continue to intervene in money markets as necessary.
