Australian Treasurer Wayne Swan called National Australia Bank (NAB) on Tuesday greedy for giving borrowers a smaller interest rate cut.

"It's a kick in the guts to working families. It's a greedy decision from the NAB and it is not justified in my view by fundamentals," The Sydney Morning Herald quoted Mr Swan.

NAB announced it would reduce its standard variable lending rate by 20 basis points to 7.47 per cent beginning Nov. 7. In contrast, ANZ Bank, Westpac and Commonwealth Bank said on Tuesday that it would pass in full to borrowers the Monday 25 basis points rate cut made by the Reserve Bank of Australia (RBA).

Even if NAB still has the lowest mortgage rates among major Australian banks, Mr Swan pointed out that other lenders such as mutuals offer lower rates. He suggested that NAB borrowers instead find better rates.

"The NAB abolished all exit fees on their mortgage loans in response to initiatives from this government, so NAB customers have the choice to walk down the road and get a better deal," Mr Swan said.

NAB insisted it made a smaller cut in interest rates because it has put in place more aggressive lending measures.

"NAB has led the industry and abolished the most disliked fees, including overdrawn fees, account keeping fees and mortgage early exit fees for new and existing customers. NAB customers will today still benefit from having the lowest standard variable rate of any of the four major banks," The Sydney Morning Herald quoted NAB group executive Lisa Gray.

ANZ will cut its standard variable rate for new customers to 7.55 per cent beginning Nov. 14. Bank of Melbourne will also reduce its rate to 7.55 per cent. Commonwealth Bank likewise reduced its standard variable mortgage rates by 25 basis points.

However, while borrowers would benefit from the RBA rate cut, it would minimally affect savers. A $20,000 deposit would have less $50 interest a year, while a $500,000 retirement fund would yield $1,250 less annually because of the 25 basis points cash rate cut.

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