It had been hoped that after nine hikes in lending rates, the ECB would not impose another rise when it meets.
But now the crunch decision on whether it raises interest rates again this Thursday, or pauses, appears to be on a knife edge.
The nine rate hikes since last July have pounded tracker mortgage holders, seen mortgage prisoners paying rates as high as 9pc, and made borrowing far more expensive for first-time buyers.
Some 70,000 homeowners coming off fixed rates by the end of the year are also facing huge hikes in repayments.
Switch your mortgage this year – Sinead Ryan
Money markets think the governing council of the Frankfurt-based central bank will hold off on another rate rise when it meets this Thursday due to fears of a recession in Europe.
But a number of economists are adamant that rates will rise again this week as inflation is proving persistent.
And there are fears that even if the ECB holds off on announcing a new rate rise this month, it could come back again in October with a 10th rise.
Each 0.25 percentage point rise in mortgage rates adds around €156 to the annual repayments on each €100,000 borrowed over 25 years.
The average amount outstanding on a tracker mortgage is €133,000.
Nine ECB rate hikes so far have added €280 a month to the payments on this size of mortgage. Over a year, that works out at an extra €3,360 in payments.
Davy Stockbrokers economist Conall Mac Coille said money markets were betting there will be no rise this week, but a 0.25 percentage point increase could not be ruled out.
Goodbody Stockbroker economist Dermot O’Leary said his view is that the markets are underestimating the likelihood of a rate rise this week due to high inflation.
Independent economist Austin Hughes said: “It’s a close call and likely to be decided by how much inflation improves and activity outlook worsens in new ECB forecasts.
“My best guess is a ‘hawkish pause’ where they don’t raise rates this week but strongly warn that rates could rise later this year if inflation doesn’t fall further.”
Money markets have calculated that there is a 38pc probability of a rate rise this week, according to Justin Doyle of specialist bank Investec in Dublin. But Dutch central banker Klaas Knot suggested last week that markets were underestimating the prospect of a hike.
Central bankers are trying to use higher rates to calm inflation across the currency zone.
Eurozone inflation has halved since last year to 5.3pc in August, but it is still running well above the ECB target.
Upward pressure is coming from rising oil prices and a weakening euro that pushes up import costs, meaning another rate rise is still on the cards.
The ECB, led by president Christine Lagarde, has raised borrowing costs at nine policy meetings in just over a year.
This has seen its benchmark refinancing rate go from an all-time low of 0pc to a record high of 4.25pc in a bid to tame the biggest inflation surge for a generation.
Those most impacted are around 120,000 homeowners still on trackers, and those unable to move from vulture funds where they are only offered variable rates.
Some of the variable rates for these mortgage prisoners are as high as 9pc.
However, higher ECB rates mean mainstream banks are charging more to new buyers on fixed rates, while those coming off existing fixed rates face paying more.
Some 72,000 mortgage customers are coming off fixed rates by the end of the year and they will face increases in their monthly repayments, as they will be unable to look in to the favourable fixed rates they got previously.
Figures released last month by the Central Bank showed that the interest rate on new mortgages hit 4.04pc in the summer.
