Citicorp has launched a direct-mail program to sell home-equity loans in New York.

The company's flagship bank is blanketing the metropolitan area with letters promoting preapproved credit lines of about $12,000.

About 248,000 customers are receiving the letters, said Loren Smith, managing director in charge of retail marketing for Citibank in New York.

The letters offer customers an interest rate of 12.5% with no closing costs. They also promote the product as one of the last bastions of deductibility for consumers: The effective after-tax rate on the loans, according to the promotion, could be as low as 8.63%.

Warning Potential Borrowers

The letters warn potential borrowers that the preapproved lines will be withdrawn if the total debt secured by a home exceeds 90% of its estimated value. For co-op apartments, the limit is a more stringent 60%.

In addition, a customer must have annual income of at least $35,000 to receive the full line.

Citibank expects a 1.5% response rate, Mr. Smith said, adding that the response thus far is "about on forecast. The bank had about $3 billion in home equity loans outstanding at the end of the first quarter, he said.

Citicorp had previously promoted home-equity loans through direct mail in Chicago and upstate New York. The current campaign, which began in April, is the first of its kind for the company in New York City.

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