Wealthy Australians are getting better deals on home loans than those less well off.

The gap between the interest rates charged to wealthy buyers and those who have scraped together a minimum home deposit is bigger than ever, according to the bi-annual JP Morgan Australian Mortgage Industry report.

It found banks are opting against passing on the benefit of lower funding costs – or how much they pay to borrow money to finance mortgages – to all buyers.

Some are able to get a discount of up to 140 percentage points on their mortgage rate, while others are lucky to score a 20 percentage point reduction.

According to Martin North, of Digital Finance Analytics, which helped compile the report, the biggest discounts went to wealthy households, those with bigger deposits, and those applying for larger loans.

People with smaller deposits, like first home buyers, and those with adverse credit histories, came in at the other end of the spectrum.

“What’s happening is that the discount overall is rising but the spread of discounts is wider than it has ever ever been in the time that we’ve done these surveys,” he said.


But JP Morgan analyst Scott Manning said proposed federal government changes to the finance system could push up borrowing costs and crimp the banks’ ability to offer discounts.

“What we see is the most likely course of action is actually reducing the average discount across the board,” he said.

The inquiry’s interim report noted major banks were able to borrow more cheaply than their smaller counterparts, and it is considering ways to level the playing field.

Mr Manning said a proposal for major banks to lift the amount of capital they hold could push funding costs up by $2 billion, thus reducing their ability to discount.

The inquiry, headed by former Commonwealth bank boss David Murray is due to hand down its final report in November. AAP

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