Home-equity loans are becoming the loans of choice for many lenders as they seek to compensate for the disappearance of refinancings.

Their relatively low risk and high return are an attractive draw.

"The home-equity market is finally awakening after being asleep for the past two years," said Mark Zandi, chief economist for Regional Financial Associates, a West Chester, Pa.-based research firm.

As of 1993, outstanding home-equity debt totaled nearly $255 billion, according to the Federal Reserve Board.

Of that total, home-equity lines of credit, revolving lines that consumers tap into as needed, accounted for more than $110 billion, and lump-sum equity loans totaled about $145 billion.

4.4% Growth Foreseen

A recently published report by Regional Financial projected that the amount of home-equity lines of credit would grow 4.4% this year and would continue to grow moderately for the next two years.

The numbers are striking after dismal showings during the past two years.

Mr. Zandi attributed the weak numbers of the recent past to poor consumer demand and the overwhelming attention banks put on the refinancing market.

A rough economic ride earlier this year slowed growth in the home-equity market, he said, and reluctant consumers stayed away from borrowing for a myriad of reasons.

* A weak job market and the slow growth of personal income stopped some consumers from borrowing.

* Difficulty meeting past debts over the last three years made some people reluctant to borrow.

* Home appreciation rose more slowly than the rate of inflation.

* Consumers were taking money from low-yielding bank deposits or certificates of deposit instead of borrowing to pay down debt.

According to Mr. Zandi, modest growth of personal wealth and the employment market, as well as a moderate rise in home prices, should give a boost to the home-equity market.

"Right now lenders are waiting for the market to stabilize, but I think it's come to life," said Mr. Zandi.

Regional gains should be modest in the traditional markets of the Northeast and California, with the mountain states and the Pacific Northwest receiving a big chunk of the new growth.

The South and Southwest have proportionately lower home-equity loan holders than the rest of the country.

Delinquency rates on second mortgages have been less than 1%, one-fourth the national average for conventional home mortgages, according to the American Bankers Association.

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