THE man charged with setting fire to a Yeppoon house on Tuesday night was refused bail in the Rockhampton Magistrates Court yesterday.

Terrance Laverty, 42, faced charges of arson and obstructing police after fire destroyed the Ben St house he was renting with his partner.

Police prosecutor Constable Paige Barrow said the relationship had ended earlier that day and the woman had moved out.

She said neighbours heard loud crashing and banging coming from the residence and saw a man, believed to be Laverty, wielding a machete.

One witness told police the man stated his partner had cheated on him and he was going to "cut her head off". About 7.14pm a man carrying a machete entered the Happy Sun Chinese Restaurant in Yeppoon and demanded money.

No charges have been laid yet in relation to this offence.

Const Barrow said police were conducting patrols about 7.30pm when they saw smoke coming from Ben St.

They located Laverty on the front stairs of the burning residence.

"When police asked him if he had lit the fire he said, 'yeah, but I didn't think she'd go up so quickly'," Const Barrow said.

"At the station the defendant came up with an alternate version and told police he fell asleep with a lit cigarette."

Solicitor Grant Ireland made an application for bail on Laverty's behalf. He said there wasn't enough evidence to satisfy the court that the fire was deliberately lit.

He said Laverty had been drinking solidly since last Tuesday and was intoxicated at the time of the incident.

Magistrate Tom Bradshaw refused bail on the grounds that Laverty was an unacceptable risk to the public's safety.

He was remanded in custody to appear on November 28.