Interest rates can rise as well as fall. Borrowers should take note of yesterday's decision by the Bank of England to push up UK interest rates for the first time in four years, citing evidence of economic recovery.
There is no reason to expect an early increase in euro zone rates, but once the EU recovery takes hold, borrowing costs will rise.
The new president of the ECB, Mr Jean-Claude Trichet, struck a balanced tone at his first press conference yesterday, which followed a council meeting that decided to leave interest rates unchanged. There were signs of recovery, he said, but equally concrete evidence of a pick-up in real activity was not yet evident and the rate of inflation should ease further. This appears to indicate that euro zone interest rates will stay at current levels for a considerable period. In the US, the Federal Reserve Board has made similar indications.
This suggests that costs to borrowers here will remain around current levels well into next year. Thereafter, the picture is less clear. If the euro zone recovers strongly and inflationary pressures reappear, then there can be no doubt that the ECB will move to raise rates. However, while the US recovery now appears well under way, evidence of a sustainable pick-up in Europe is not yet conclusive. Presumably the ECB will want to see recovery well established before moving rates higher.
Thus there is no need for borrowers to panic. However, longer-term interest rates have already edged upwards and short-term variable rates are now as low as they are going to be. Borrowers would need to realise that while low and stable inflation and interest rates was one of the promised benefits of euro zone membership, rates are now at an historic low.
The average rate which borrowers are likely to face over the 20-25-year mortgage term will be somewhat above current levels. Just how far above will depend on longer-term inflation trends, which in turn will be influenced by external factors such as the exchange rate of the dollar and oil prices - and by the success of the ECB in fulfilling its mandate.
In terms of the ECB, all eyes are now on Mr Trichet. He faces the job of clarifying the bank's communication with the financial markets, where analysts are still confused about what indicators will most heavily influence policy. A strong and credible ECB is essential if the euro zone is to develop as the promised "zone of stability". In turn this would limit the likely increases in interest rates over the next three to five years. For Mr Trichet, it is all to play for.