Faced with flagging demand, banks have been cutting prices on their home equity loans, a new survey shows.

The survey, by the American Bankers Association, found that banks with large home equity businesses were generally offering the loans last year at the prime rate plus 1.5 percentage points. That was down from roughly prime plus two percentage points in 1991, said David Olson, a Columbia, Md., consultant who worked on the study.

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