Australia's fourth-largest bank passed on the rate cut in full this time around, though it said funding costs are largely unrelated to the central bank's official cash rate. ANZ said it would now review rates on the second Friday of each month. "It provides us with the flexibility to reflect movements in funding costs across the full spectrum of funding sources - not solely in response to the Reserve Bank's cash rate," Phil Chronican Chief Executive for the bank's Australian operations said in a statement. The Reserve Bank of Australia decides rates on the first Tuesday of every month and banks draw flak for not passing on cuts in full or raising rates by more than the central bank in a country where more than a third of 8.5 million households have a mortgage. Australian banks' reliance on offshore funds to bridge the gap between total loans and deposits means central bank cash rate is not central to their pricing strategy anymore. The four big banks raise about $100 billion annually largely from Europe and United States, where cost of funds have shot up. "Retail banking margins have been contracting as the cost of funds has progressively risen over the last six months," Chronican said. The other three big banks-- National Australia Bank , Commonwealth Bank of Australia and Westpac Bankin Corp -- said they are still reviewing rates. The four top banks control about 90 percent of the $1 trillion mortgage market. ANZ's decision to hike is a gift for the unpopular Labor government, which has been under pressure from political opponents to rein-in record bank profits in a country where home ownership and mortgage repayments are close to an obsession. "A great early Christmas present for ANZ customers today. Heat is now really on NAB, Westpac & CBA to do the right thing by their customers," Federal Treasurer Wayne Swan tweeted. For an average mortgage of A$300,000 ($307,800), a cut of 25 basis points equals an extra saving of A$600 a year. Even a modest easing represents a large boost to incomes. Earlier this week, the Reserve Bank of Australia (RBA) lopped 25 basis points off its cash rate, taking it to 4.25 percent, the second cut in as many months. ANZ shares were down 0.5 percent in afternoon trade in afternoon trade in line withh a fall in the broader market.