A Wary Eye on Mortgage Rates : Thrifts: S&L; executives and economists say that rates could stabilize or even head down again if Clinton gives the right signals.

Savings and loan executives and economists say mortgage rates could start declining again if President-elect Bill Clinton proves to financial markets that he isn’t going to balloon the budget deficit.

Since early September, when average interest on 30-year fixed-rate mortgages hit a 19-year low of 7.84%, rates have jumped by nearly half a percentage point.

That’s a reflection of the financial markets’ nervousness over what Clinton might do, said executives and others attending the final session of the Savings and Community Bankers of America convention in San Diego on Wednesday.

If the new President wants to see rates stabilize or even edge down, he must couple any effort to stimulate economic growth with a credible plan to reduce the deficit, they said.

That’s essential to prevent an increase in interest rates from offsetting the economic effect of any stimulus from increased government spending or tax cuts, they said.

Martin Regalia, chief economist of the trade group, said he believes that Clinton will resist calls from liberal Democrats and keep his economic package relatively moderate.

If that happens, mortgage rates, which hit a four-month high of 8.29% last week, according to the Federal Home Loan Mortgage Corp., could fall as low as 7.5% or 7.25% by the middle of next year, he said. If not, they could shoot up over 9%, he said.

“I think Clinton’s a pretty sharp guy, and I think his advisers are pretty sharp,� Regalia said. “They have a guy with a mandate, and they don’t want to mess it up by doing something stupid that causes financial markets to react badly.

“If they do this one right, they could be looking at a fairly long run of a reasonably good economy. But if they mess this one up, it could be a nightmare for four years.�

In a survey by the trade group, 500 S&L; executives seem to be modestly optimistic about mortgage rate prospects.

Only 10% said they expect a substantial increase over the next six months. Seventy-one percent anticipate a moderate increase of 1 percentage point or less.

An additional 16% expect no change in rates, and 3% see a modest decrease of less than 1 percentage point.

“I wouldn’t expect to see much change in interest rates for a long time. . . . I would think that they would remain stable or only slightly increase,� said David F. Holland, chairman of Boston Federal Savings Bank in Burlington, Mass.

Economist James W. Christian, a consultant based in Boene, Tex., predicted that long-term rates, including mortgages, could fall three-quarters to 1 percentage point over the next two years. Deposit rates over that period may increase by half a percentage point, he said.

S&L; executives said many of their depositors, especially retired people, are being hurt by the lowest deposit rates since the Great Depression.