James "Jimmy" Gargasoulas, 26, was bailed by a bail justice on the weekend after he was arrested in St Kilda for a number of alleged offences, including family violence and stealing another car, sources said.

He was staying with his mother in a public housing flat in Windsor, where he allegedly stabbed his brother, Angelo, in the early hours of Friday morning. 

Neighbours said they had regularly heard arguing inside the Raleigh Street unit.

The car Mr Gargasoulas allegedly used to mow down pedestrians belonged to 76-year-old Gavin Wilson, who lives at the housing commission flats.

Mr Wilson said Mr Gargasoulas was a "nice kid", but on Wednesday night he became violent.

He said he came into his flat with a Bible, sat down and started burning it before throwing the burning book into his face.

"I flicked it onto the floor then he stood up and punched me," Mr Wilson said.

He said Mr Gargasoulas then attacked him. "Give me your keys or I'll gouge your eyes out," Mr Gargasoulas allegedly demanded. 

Gargasoulas has a second Facebook page on which he recently began posting about religion, God, Satan, heaven and hell.

The comments are often nonsensical and rant about good and evil. In one chilling post he says an army will be needed to "take me."

On Saturday he posted: "I know exactly how to take you dogs down the power of knowing has revealed and I shall have God's laws re-instated."

And then, on Monday, four days before the Bourke Street rampage: "I declare war on tyranny today you dogs will have the option to either believe in me and his positive energy he offers and stay faithful to me or serve the one who enslaves you at his feet.

Police said the incident is not terrorism related. "This individual is not related to any terrorism activity," Chief Commissioner Graham Ashton said.

Mr Gargasoulas' erratic behaviour dramatically escalated on Friday morning.

In the early hours, Jess Bergin said she heard screaming outside her flat on the other side of road and looked out the window.

"He had a knife and he was hacking at either a guy or a girl, I don't know," she said.

They got into a waiting car, and then the knife-wielding man began hacking at the car, she said.

Mr Gargasoulas, who also goes by the name Dimitrios, is currently on bail after being charged with family violence offences last weekend.

He is known to police for drug-related issues, family violence assaults and has "an extensive family violence history".

It is understood that police began pursuing Mr Gargasoulas on Friday in a maroon-coloured sedan after he allegedly took a woman hostage, who later escaped on the Bolte Bridge.

Police called off the pursuit over concerns of public safety, just outside the CBD.

The car was next seen doing "burnouts" and driving erratically at the intersection in front of Flinders Street Station. Mr Gargasoulas was filmed hanging out the driver's window and abusing passerby.

He then sped north towards Bourke Street, where he allegedly ploughed through the crowded shopping strip, killing three people and injuring 20.

Police shot Mr Gargasoulas in the arm further west on Bourke Street, dragging him from the sedan and making an arrest. He is being treated in hospital with non-life threatening injuries.

A relative said Mr Gargasoulas has had a drug problem and has been in and out of jail for car theft and drug offences.

"Jimmy has always been a bad person," she said. "I knew it was him. I saw it on TV ... the picture of him sticking his head out when he was doing burnouts.

"I saw a picture and I thought 'Oh My God, that's Jimmy.' I'm shaking. I knew it, as soon as I saw that picture I had this feeling. I can't believe this.

"I bawled out crying when they announced that baby died. I'm shaking."

Mr Wilson, owner of the car, has also expressed disbelief at Friday's horrific rampage. "It's a terrible thing. I can't believe it," he said. "I feel awful".