By not passing on all of the Reserve Bank's rate cut, the major banks have ensured only half the stimulus gets passed through to housing. And that's a good thing, writes Michael Janda.

The major banks have copped a bit of a bashing for their decision not to pass on the Reserve Bank's full 25-basis-point rate cut.

Maybe not as much as in the past, nor probably as much as they were braced for, but Australians from the PM down have expressed the ritual outrage at the big four profiting at the expense of struggling home owners.

Except those home owners shouldn't be struggling - at least not from interest rates.

Reserve Bank data shows that standard variable mortgage rates are the lowest they've been since the late 1960s, and the same data show most borrowers can now get another 0.8 per cent knocked off the headline rate through package discounts.

That means Australians likely now have the lowest mortgage rates they've had since the RBA started keeping data on it well over half a century ago.

If there are home owners struggling out there it's generally because: a) Their livelihood was linked to the resources sector, the collapse of which has driven severe downturns in WA, Queensland and the NT; or b) They're a recent buyer who's been tempted by low rates, or talked into it by others, purchasing in the most expensive housing market Australia's ever had and one of the dearest in the world.

Cutting interest rates won't do a lot in the medium to longer term to help either of those groups, yet the Reserve Bank decided to do it anyway.

Not only that, but a key part of the Bank's justification for lowering its cash rate target was that the housing market has cooled down.

Here's part of what Glenn Stevens had to say in his post-meeting statement:

The most recent information suggests that dwelling prices have been rising only moderately over the course of this year, with considerable supply of apartments scheduled to come on stream over the next couple of years, particularly in the eastern capital cities. Growth in lending for housing purposes has slowed a little this year. All this suggests that the likelihood of lower interest rates exacerbating risks in the housing market has diminished.

Yet CoreLogic's data, out the day before the RBA's meeting, show Sydney prices grew 9.1 per cent over the past year, while Melbourne was up 7.5 per cent.

If that's the RBA boss's idea of moderate, Mr Stevens should consider going teetotal.

Even Hobart (6.2 per cent) and Adelaide (4.8 per cent) had what could reasonably described as solid gains.

If Stevens hailed from Perth or Darwin, where prices are slumping, you could forgive this depiction of the housing market.

But this is surely a case of wilful ignorance, given that Stevens only has to walk down the street in his own neighbourhood in the south of Sydney to see home prices surging.

Figures from CoreLogic show home prices in the Sutherland Shire jumping 17 per cent over the year to June 2016, while units were up 12.4 per cent.

Not only that, but the "considerable supply of apartments scheduled to come on stream over the next couple of years" is a potential problem, not a source of comfort.

What exactly does the RBA governor think is going to happen when tens of thousands of extra apartments hit markets priced as if there's severe undersupply?

High school economics would tell you that prices should fall and, while that's a great thing for those currently locked out of home ownership by high prices, it's a looming disaster for the financial system and Australia's short-term economic health.

As investors pull out of off-the-plan deals because the value of their units has slumped, developers may face huge losses on reselling the apartments. While they can chase those from the investors, with foreign buyers making up a large share of the market, they may struggle to recoup.

In any case, by the time they get back the difference from investors, they will have probably gone bust from the lack of cash flow.

With residential construction one of the biggest current drivers of east coast jobs and growth, NSW and Victoria could start looking a lot more like WA's floundering economy, described so well by my colleague Stephen Long.

To top it all off, while growth in lending has slowed "a little", 6.7 per cent growth for the year to June isn't too much off last November's 7.5 per cent peak.

It is also more than three times Australia's 2.1 per cent wage growth over the past year leaving Australia's debt-to-income ratio at a mind-blowing record 186.9 per cent.

The only good reason to cut rates right now in Australia is really that everyone else has been doing it, and we need to get the Aussie dollar down (although the rate cut didn't even accomplish that).

In this context, it's clear the major banks have actually done the RBA a favour by not passing on all of the rate cut.

The Reserve Bank still gets the currency benefit of lowering rates across financial markets, but only half the stimulus is passed through to housing.

The banks' move may make a few ebullient property investors rethink their assumption that mortgage rates will keep going down - even if the RBA doesn't raise them, the banks might have to one day soon.

The significant increase in some key term deposit rates also gives long-suffering savers some reasonable choice about where to put their money, perhaps slowing the rush to property investment.

After all, capital gains (or losses) aside, a one, two or three-year term deposit is now giving a return very similar to (and in some cases better than) the gross yields on rental properties in Sydney and Melbourne.

Maybe the Reserve Bank's leadership is quietly thankful. Then again, given the relaxed attitude to housing expressed in Stevens' statement, and comments by other senior officials, maybe the RBA just doesn't get it.

Perhaps Australia will muddle through a few more years without a recession but, as economist Steve Keen recently warned, the storm clouds are gathering fast.

After earlier this year repeating a warning against the delusion that debt-laden real estate investment is an easy road to riches, it seems Glenn Stevens has given up and is going with the flow as he nears the end of a long RBA tenure.

The risk he faces is that, if doomsayers such as Steve Keen are right this time, Stevens could go down as Australia's Alan Greenspan - the man who fuelled the US housing bubble that ended up blowing up its economy.

Michael Janda is an online business reporter with the ABC.