Interest rates could start rising as early as July sparking a mortgage repayment shock for hundreds of thousands of homeowners.

President of the European Central Bank (ECB) Christine Lagarde signalled that multiple rate hikes could be coming.

She said: "If the situation continues as predicated, there is a strong likelihood rates will be hiked before the end of the year. How much and how many times will be data dependent."

It spells bad news for people with variable rate mortgages as even a once-off modest increase could add €400 a year to their repayments.

Personal finance expert John Lowe warned last night: "It'll be a disaster if those rates start going up."

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But some experts believe the ECB interest rate hike may help cool the housing market by making people cautious about their spending.

Austin Hughes, chief economist at KBC bank, said: "You won't see a mechanical collapse in prices, but it may have a cooling effect."

Sources said ECB policymakers are keen to end their bond purchase scheme at the earliest possible moment.

As well as an early rise in rates, ECB sources are predicting as many as three hikes this year.

If the base rate goes up by 0.25% it will automatically mean borrowers with tracker loans will see an instant rise in their repayments.

Someone with a €300,000, 25-year tracker loan of 1% above the ECB base rate, which is zero, will currently be repaying €1,130 a month but a 0.25% increase would instantly push the amount up to €1,164, an extra €34 a month or more than €400-a-year.

However, when the ECB started raising rates in 2006 in response to the financial crisis they went up eight times between March 2006 and July 2007.

The Base Rate - on which mortgage rates are calculated - hit 3.75% in October 2008 before they started coming down again.

Mr Hughes said: "Stupidly, (the ECB) kept it right up to the crash of 2008 when the world was falling apart. The last increase was in 2011 so what's happening now may seem fast and furious but it is nowhere near the increases we saw in 2000 and again from 2005.

"I think the markets expect the interest rate rise to be more muted this time, as a lot of the inflation in the European economy is driven by energy prices, so slowing the housing market won't solve the increase in cost of energy."

He said that last month Lagarde noted "the journey has begun", towards "normalising" policy.

Lorcan Sirr, a housing expert and senior lecturer at Technological University Dublin, said a small interest rate rise may not dampen the housing market.

He added: "The main driver of housing prices is usually interest rates. However, the problem is that there are a lot of people looking for houses; these buyers seem to have a lot of money and there is also wage inflation pushing up house prices. So you have those three factors working against any increase in interest rates.

"Also councils are buying twice as many houses as they are building, so the councils are competing against home buyers. All of that is pushing up prices, so we don't know yet if the ECB rate increases can counter that."

Expert and 'Moneydoctor' Mr Lowe said a hike might not materialise, adding: "I think that's more maybe a wish than an actual fact because they have basically said you can get fixed rate mortgages for five or even ten years."

"They're thinking 'We've got to do something about inflation so we need to start thinking about raising the rate'.

"I can't see it happening. I think it's more of a scare tactic than a policy decision."

Sinn Féin housing spokesman, Eoin Ó Broin, said the ECB rate increase would be "bad news" as Ireland has the highest mortgage rates in the EU.

He added: "The only way to dent this is for the State to increase the amount of affordable housing, and they can still do that with low interest rate loans to councils."

The policymakers who spoke to Reuters, however, said that normalisation should mean returning to the neutral rate of interest, which neither stimulates nor holds back growth. They put this at around 1% to 1.25%.

Interest rates can only rise, however, once bond purchases conclude and all nine policymakers, who spoke on condition of anonymity, said this should happen on June 30 or July 1. This means the ECB would be in a position by its July 21 meeting to raise rates.

An ECB spokesman declined to comment.