I dont think interest rates can go as low as some of you are thinking.
Look at bank borrowing costs:
70 basis points to cover the cost of the government guarantee.
60-70 basis points to cover risk premium over government debt.
140 basis points to cover bank profit premium (this is a minimum)
So even if RBA rates reach zero, the absolute minimum variable interest rate is around 2.8% and in actuality this rate would be higher, because as RBA rates approach zero, the market would demand a higher risk premium (Australia is not the US, hence its not the reserve currency of the world).
I would be VERY careful of assuming 100% pass down of future interest rate cuts. I would also be VERY careful of extrapolating future RBA interest rate cuts themselves, now that the government has passed its $40something billion stimulus package, i have a strong feeling the RBA is going to be much more hesitant in making large cuts to official interest rates.