The average interest rate on a one-year adjustable-rate mortgage in the U.S. (their equivilent to our variable rate) is about 2.5%. So yes, ultimately Australia should reach a variable mortgage rate floor of about 3% (given our banks' over-reliance on offshore funding) - even with the RBA cutting all the way to 0%.
Then the only tool left for the RBA will be QE, which hasn't proved very effective in the US or Japan or the UK & now Europe. That's the power of deflation when an historic global credit bubble bursts.
