After two years of marginal growth, consumer loan outstandings jumped 10.2% last year at the nation's banks, and 13.4% at the 300 largest, according to an American Banker survey.

Consumer loans held by the nation's commercial banks totaled $935.7 billion at the end of 1993, up $86.9 billion from $848.8 billion the year before.

Last year's growth was almost double, on a percentage basis, that of the previous two years. In 1992, consumer loan outstandings rose $26.2 billion, or 3.2%, and in 1991, they rose $18.8 billion, or 2.3%.

Consumer loans at the top 300 banks grew even faster. The top 300 banks had $645.3 billion in consumer loans at yearend 1993, up $76.2 billion from the year before.

Low Rates Helped

For the survey, consumer loans were the sum of one- to four-family mortgage loans, home equity loans, and a category called "all other consumer loans," which includes credit card, single-payment, and installment loans. Installment debt can be automobile loans, home improvement loans, or student loans.

Some observers credit low interest rates fro fueling consumers' debt demand.

"For the past year, people have moved from a position of liquidating debt or paring back debt to take advantage of low interest rates, and making necessary purchases on credit," said Joe Belew, president of the Virginia-based Consumer Bankers Association.

But the trend may not last, said Judah Kraushaar, an analyst at Merrill Lynch & Co. Consumers, he said, are borrowing faster than their incomes are growing. "There's only so much the consumer sector will be willing to leverage up," he said.

One concern for banks is that they are competing fiercely for these loans, slashing margins on everything from credit cards to auto loans and residential mortgages.

"The risk is that loan pricing becomes so poor that banks are not being adequately compensated for the risks they are taking," said David Berry, director of research at Keefe, Bruyette & Woods Inc.

Like other analysts, Mr. Berry said the impact of cut-rate lending has not yet shown up on the bottom line. Historically, the risks of thin margins are not apparent during high-growth periods.

Even in New England

Still, the dramatic growth in consumer lending is a clear sign of an improving economy. Even in regions such as New England, where the economy lags the nation's, consumer loan volumes rose.

Regional banks consistently reported double-digit growth, with a few megabanks showing even greater improvement. Banc One Corp., First Union Corp., and PNC Bank Corp. all registered greater than 40% year-over-year growth.

In New England, Bank of Boston Corp., for instance, posted 73.66% growth in consumer loans. Citizens Financial Group's consumer loan volume increased 70.88%.

Consumer loan volume in another formerly troubled area of the country, the Middle Atlantic states, grew at many banks. For example, Baltimore-based First Maryland Bancorp increased its loan volume 7.09%.

Home mortgage volume for all banks jumped 13.6%, to $443 billion, last year, from $390.1 billion in 1992. In 1992, mortgage loan volume had grown by 8.2%.

Credit card loan volume also jumped 13.6%, to $154.4 billion from $135.9 billion in 1992. Such growth is a reflection of consumer confidence in the economy, particularly after 1992, when credit card loan volume declined 2.3%.

Home Equity Loans Fell

The only decline in loan volume in 1993 was in home equity loans, which dropped 0.8% after homeowners slowed refinancings as interest rates ticked up.

A great deal of consumer loan growth was fueled by an increase in automobile financing. Bank of Boston saw its greatest growth in single-payment, installment, and student loans.

Bank of Boston's industry-leading 104.8% growth in those types of loan was fueled by its recent acquisition of Fidelity Acceptance Corp., which lends to auto buyers with bad credit histories.

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