This is a real how-long-is-a-bit-of-string question. I personally think that Europe is a long, long way from being out of the woods. There's a lot of debt floating around that has not been dealt with (including huge amounts not in Ireland) - and a lot of ways that the Euro economy could be in for more big shocks leading to big legs down.
Talk of deflation is starting to spread - which mortgage-wise would mean that for those on trackers, increased payments aren't likely to be the enemy. Wage deflation and unemployment are the more likely problems - not being able to meet the repayments. Of course, those on variable mortgages could be squeezed both ways.
Germanys economy is of course key - but as so much of it is dependent on exports, they aren't likely to get a sustained and viable bounce if the global recession continues to bite on a wide scale...