In defiance of textbook economics, consumer interest in home equity loans is marching in the same downward direction as interest rates.

Since a drop in interest rates makes it cheaper to borrow money, a dip in rates is normally expected to spur loan demand. But with the economy's outlook still uncertain--and the local employment outlook shaky--consumers are apparently reluctant to take on new debt.

Home equity loans in California plunged 10% during the first six months of 1991, said Charles Campbell, a vice president at Wells Fargo Bank, the nation's biggest home equity lender. Such a drop makes it likely that home equity lending in the state will be down for the entire year.

"With layoffs and spending cutbacks, people don't want to take on more debt," said Wallace Bowen, executive vice president at Fidelity Federal Bank in Glendale.

Consumers aren't alone in their queasiness about debt. With government regulators preaching caution, lenders are skittish about most types of lending, including home equity loans. Lenders say they've tightened their credit standards. For those who want them, home equity loans are harder to get than in the past.

Home equity loans are hybrids that take features from second-mortgages and from credit cards. Lenders give borrowers a line of credit, secured by the equity in their home. Borrowers draw on the credit line as needed, and repay it in monthly installments.

Normally, the interest rate on home equity loans is adjustable. Depending on the lender, the home equity interest rate tracks fluctuations in the prime rate, or in the rates on certificates of deposit or U.S. Treasury bills. For example, with the prime rate now at 8%, the rate on home equity loans pegged to the prime now ranges between 9.5% and 10%.

Once used primarily for home improvement, the popularity of home equity loans surged after a 1986 tax-law change eliminated interest deductions on other forms of consumer debt. Home equity loans have become an all-purpose form of consumer debt, used not only for home improvements, but to finance new cars, college and even vacations.

Last year, home equity lending surged 47% in California to a record $11.4 billion, making it the leading state for home equity loans.

Any drop in interest rates, of course, benefits people who already have home equity loans. Wells Fargo's home equity rate, for example, has dropped to 9% from 10.89% in January. For people with an outstanding balance of $25,000, minimum monthly payments have slid to $188 from $229.