Bank One Corp. expects on-line applications for its home equity loans to grow exponentially in the next few years.

Use of the bank's on-line home equity service jumped 400% in the week after Jan. 14, when it was made available nationwide, said Gary Arnold, national product manager for consumer lending. The service was first tested in 13 states.

Still, Mr. Arnold said, "Less than 5% of our home equity applications are done on-line. We are looking at a modest 8% to 10% growth rate this year over the 1998 figures for our total home equity volume, but we expect on-line growth at four digits because we were such a small presence last year."

The site lets consumers apply for a home equity line and get a decision within 50 seconds.

Though home equity loans are the smallest portion of the company's business, Mr. Arnold said it is the fastest-growing area in a segment of lending the bank wants to expand.

After its merger with First Chicago NBD Corp. last fall, Bank One Corp. became the nation's third-largest bank provider of home equity loans. It had about $12.1 billion of open-end lines and permanent closed-end home equity loans in portfolio last June 30.

Bank One ranks behind BankAmerica Corp., which had $22.9 billion of home equity holdings, and First Union Corp., which had $12.9 billion.

Banking competitors have similar on-line sites, but Bank One claims to be the first to provide nationwide service with such speed.

Mr. Arnold said only about 15% of homeowners have home equity loans.

"The meltdown of the subprime finance sector and the slowing of first- mortgage refinancing has cooled the market," Mr. Arnold said. "Our on-line home equity application volume has been relatively flat ... but we expect a pickup in the second quarter."

Mr. Arnold said the site is geared primarily toward the prime customer. The proprietary model is not designed to approve customers with blemished credit but is being upgraded to handle subprime applications, he said.

The service is available 24 hours a day, seven days a week.

The borrower applies on-line, and initial approval can appear in as little as 20 seconds. Applicants are contacted on the phone by a loan officer to begin the loan closing and can expect to get their money in five to 10 days.

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