Fixed-Rate Mortgages Hit 10% Again : Housing: Experts had hoped that the New Year would bring lower interest rates so that home sales could rebound.

After three months of virtual stability, interest rates for fixed mortgages in California and nationwide have begun to creep higher to 10% and above, despite continued slow housing sales.

Analysts are divided over whether the rise is just a temporary blip or if rate hikes will continue. If rates do continue to increase, a hoped-for resurgence in home sales this spring may not materialize, some experts fear.

The average interest rate nationwide on 30-year fixed-rate mortgages climbed last week to 9.9% from 9.8% the previous week, according to the Federal Home Loan Mortgage Corp. That’s the highest rate since 9.92% on Oct. 20.

In the West, where California is a dominant factor, rates rose even more sharply, to 10.08% from 9.93% a week earlier, according to the agency, more commonly known as Freddie Mac.

Rates nationally last hit double-digit figures on Oct. 6, when they stood at 10.10%; in the West, rates last topped the 10% level on Oct. 20, when they were at 10.03%.

Most analysts say recent fears of rising inflation and the refusal by the Federal Reserve to loosen credit conditions are contributing factors to the rise in fixed mortgage rates.

Robert Van Order, chief economist for Freddie Mac, said mortgage rates are following recent rises in rates on Treasury securities. “They go up and down like 10-year Treasury notes,” Van Order said. He predicted that fixed mortgage rates will not fall any time soon.

But Paul S. Havemann, president of HSH Associates, a mortgage research firm in Butler, N.J., disagreed. “When all this shock wears off . . . rates will come down again in one or two weeks,” Havemann said.

At Great Western Bank in Los Angeles, where fixed-rate mortgages have accounted for about 20% of all home loans made this month, rates rose last week to 10.3% from 10%.

“Our rates went up last week as a result of the cost in the secondary market where we sell the fixed rate,” said Lynn Taylor, a Great Western spokeswoman.

However, Taylor was uncertain if fixed rates would continue to climb. “If we could predict rates accurately, we wouldn’t be offering adjustable-rate mortgages.”

Adjustable-rate mortgages at Great Western remained at a steady 7.95%, Taylor said. She said the increase in fixed rates could cause home buyers to seek adjustable-rate plans instead, because of their appealing introductory rates.

But Phillip Vincent, vice president and economist for First Interstate Bancorp, said it is best to go with a fixed rate because they assure that monthly mortgage payments do not vary over time. He predicted that rates on fixed mortgages will “stay around the 10% range.”

“I don’t think we’re heading up to 10.5%,” Vincent said. “I think we’ll stay around 10% for the next year and a half.” He said 10% is something “people could live with.”

Rates on fixed mortgages reached their 1989 peak last March at 11.22%.

Vincent predicted that housing prices in California will be flat at best for the next year or two, provided that the economy is strong. He said lower interest rates and moderate gains in personal income will make housing more affordable.

Housing sales in Los Angeles dropped 3.8% in November from October on a non-seasonally adjusted basis, and were down 9.4% from November, 1988, according to a study released earlier this month by the California Assn. of Realtors.

Rates, in percent, are averages by region for fixed-rate mortgages with a 20% down payment.