But in view of the worsening state of the global economy and the credit freeze, any benefit won't be long lasting.
But the RBA will continue cutting, and we will get at least another 0.50% in reductions by the end of the year, and possibly more if conditions continue at current fraught levels.
Major central banks in the US and Europe cut rates last night by 0.50% and China trimmed its rate by 0.27%.
The stockmarket fell sharply yesterday as America's latest stampede out of stocks offset the bounce from the 1% rate cut by the Reserve Bank.
The 5%-plus fall was a worry. Banks fell sharply.
The Reserve Bank again pushed cash into the money market to maintain a high level of liquidity and the banks boosted the amount they keep at the RBA in their exchange settlement accounts to $A9.7 billion.
And there was that fall in consumer confidence which tumbled this month after a small recovery in September.
The index fell 11% from September to 82 points, according to the latest survey from Westpac and the Melbourne Institute.
It was the ninth straight monthly reading of less than 100, showing pessimists continue to dominate optimists. The survey was taken before the shock rate cut.
Westpac's head of economics, Bill Evans said in a statement that since the stock market crash in 1987, there have been only nine months when the index has fallen by more than 11%.
He said the latest drop was sparked by the escalation of the credit crisis midway through last month.
Westpac's survey of 1,200 consumers was conducted between September 30 and Sunday of this week, October 5.
The drop in home loan approvals supported the rate cut decision, but rate rises and reductions take their time to work and it's likely that confidence will play an important part in the short term in having any impact on home lending.
The Australian Bureau of Statistics said the number of loans granted to build or buy homes and apartments fell 2.2% in August from July, when they slid a revised 0.9%.
The fall was double the market estimate for a drop of around 1%.
The total value of lending fell 3% to $A17.5 billion in August and lending to owner/occupiers dropped 2.1%, while the value of lending to investors who plan to rent or resell homes fell 5%.
The 2.2% fall in the number of loans approved, seasonally adjusted to 48,903, was the lowest number since March 2001.
Housing finance commitments have dropped by 27.1% since the recent peak at 67,126 in January 2008.
Even more dramatic, there was a 46.5% fall in purchases of new homes year on year in August.
That's pointing to very weak conditions which won't be reversed quickly.
Figures for the rest of the year are likely to be sluggish at best.
