Sailesh...can't see double digit interest rates given the level of household indebtness.
I think 8% is where the margin is and it won't stay there very long.
At 10% it is a doubling of rates from the low point. Typically you see a 40-50% increase in rates to cool demand. So given we were at 5% variable you would expect rates to peak at 7-7.5%....my 2 cents worth anyway.
I have fixed most of my rates for 2-3 years....so I am not so concerned yet. Even if I come off at 8% ...the postive CF and rent increases in the next 2-3 years should offer a reasonable cushion for myself.
Inflation is the key. If it stays in check then we may see lower rates.
Another factor now is that banks have taken over a lot of the second tier financial institutions which leaves very little competition for the big banks. This means that they will slowly increase margins which will lead to higher effective rates.
Rent increases is going to be a key factor that will keep rental properties viable. It will also be a motivator for renters to get into home ownership.