Home owners paying off a mortgage on the house they live in are on the way to becoming the new prime customer for the nation's banks.

Facing new rules on lending to investors, banks are set to fight hard for borrowers who intend to live in the home they are borrowing against and that could mean bigger interest rate discounts for these customers.

NAB's Anthony Waldron says the bank has 'a higher appetite' for owner-occupied lending. Credit:Daniel Munoz

Just this month a wholesale lender owned by National Australia Bank introduced larger discounts for new owner-occupier borrowers than new investors.

"We've got a bigger discount for owner-occupied lending than we have for investor lending," said National Australia Bank's executive general manager of growth partnerships, Anthony Waldron.