As consumers embrace home equity lines of credit as the best way to pare credit card debt, buy automobiles, and finance home improvements, banks that make these loans are reaping the benefits.

The top 50 banks in the business increased lending volume more than 12% last year, to $74.3 billion, according to Sheshunoff Information Services, Austin, Tex. Many of the top 50 lenders in the business increased volume by more than 20%, and some reported growth of 40%, 50%, even 100%. (See table on page 13.)

Home equity lines, which let owners tap the equity in their homes in increments, using checkbooks or bank cards, are gaining in popularity because of their flexibility, experts said. And interest paid on these loans can often be deducted at income tax time, making them an attractive alternative to credit cards and personal loans.

To be sure, bank mergers and acquisitions have pumped up volume. But much of the growth represents new business because home equity lending "really is viewed now as a substitute for other types of consumer credit," said James Chessen, chief economist for the American Bankers Association.

Bank credit card lending volume generally declined in 1997, and bank auto loan volume has been trending down for the past few years, Mr. Chessen said.

Equity credit lines give people cheaper credit and more fiscal maneuverability, financial planners said. Harold Evensky, a partner in Evensky, Brown, Katz & Levitt, Coral Gables, Fla., said he encourages his clients to consider the credit lines a second tier of equity. "That way, in case of emergency they don't have to sell an investment portfolio the day after the market crashes."

Mr. Evensky also said he recommends that clients use the lines to pay down expensive outstanding credit, but he stressed that the loans should not be used to subsidize "a higher standard of living."

There are some dangers associated with people's increased reliance on home equity lines, Mr. Chessen said. "You're taking day-to-day purchases you've made on credit and putting them into a long-term obligation. Does that make a lot of sense?"

Banks have stepped up their marketing efforts significantly and are reaping the rewards of more awareness of the product.

SouthTrust Corp. made the biggest leap in 1997, increasing its home equity line volume almost 200%, to $791 million. Increased sales efforts and centralization of operations boosted volume, said Denny Ragland, group vice president for the equity line group at the Alabama banking company.

People like to have the "ability to control their own lending," said Mr. Ragland. Borrowing from a line of credit lets them pay back other debts "on their own terms."

Lines of credit let homeowners "use and reuse" them "at their own convenience," said Garry Fisher, senior vice president at Wachovia Corp., Winston-Salem, N.C. The banking company increased its home equity volume 20.7% in 1997, to $1.63 billion.

Wachovia is running a home equity line campaign that features a competitive introductory rate, no closing costs, and a $500 rebate when debt is transferred from non-Wachovia lenders, Mr. Fisher said.

"It's a very competitive market," Mr. Fisher said, but many lenders continue to increase volume because of the product's popularity with borrowers. "It's an excellent way to borrow," he said.

Mergers announced in 1998 would lift the leaders in the market, giving a commanding lead to the proposed BankAmerica Corp.-NationsBank Corp. combination. With about $13.5 billion of combined home equity line business, the new BankAmerica's portfolio of home equity lines would be nearly double the size of its nearest competitor, Banc One Corp., which will gain from its own big merger.

Banc One Corp., upon completing its planned merger with First Chicago NBD Corp., would have about $7.2 billion of home equity lines, the data show.

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