Business Notes Mortgages

San Diego-based Home Federal Savings & Loan normally processes about 210 applications for home mortgage loans in a week. But last week more than 600 would-be borrowers swamped Home Federal's 163 branches across California. Many offices ran out of printed mortgage applications and had to use photocopies. Said Home Federal Spokeswoman Monica Wiley: "We've been inundated."

The reason for the sudden upsurge in business was no mystery: Home Federal was offering 30-year mortgages at a fixed interest rate of 9 3/4%. It is one of many banks and lending institutions across the U.S. that are giving out single-digit fixed-rate mortgages for the first time since 1978. The national average rate on 30-year loans has dropped to 10.2%, from 13.1% a year ago.

That decline has given a charge to the housing market. The Commerce Department reported last week that sales of new single-family homes jumped 4.4% in January, to an annual rate of 753,000, the highest level in more than two years. Experts predict that builders will start construction on as many as 1.8 million houses, condos and apartments this year, up slightly from last year's strong showing. Existing homes are selling at an annual rate of 3.32 million units, the highest since 1979. Says Maurice Sanderman, president of Sundance Homes, a Woodridge, Ill.-based builder: "There is a buying frenzy going on."