With interest rates hovering at a little over 8%, mortgage bankers have found refinancing volume drying up, and purchase loans falling as well.

"Over the last couple of weeks we've had a rather sharp backup in interest rates, much to the chagrin of mortgage bankers and consumers alike," said Keith Gumbinger of HSH Associates, Butler, N.J.

Telephone inquiries about refinancing options have fallen at the nation's largest mortgage lender, Countrywide Funding Corp., Pasadena, Calif., according to spokeswoman Laura Snow.

Countrywide has been an aggressive refinance lender, targeting borrowers with adjustable-rate mortgages through a multistate radio and newspaper advertising campaign.

In general, the purchase business is also affected by rising rates, as higher rates eliminate homebuyers on "the margin of affordability," said Kevin Bartlett, managing director of secondary marketing at Countrywide.

Mr. Bartlett did not specify how Countrywide's business had fared in the last couple of weeks. The company does not release weekly purchase volumes.

Rates have risen in the past two weeks, in response to a reassuring economic forecast from Federal Reserve Chairman Alan Greenspan. Many believe this means the Fed won't cut interest rates again anytime soon.

At the semiannual Humphrey-Hawkins congressional hearing on July 19, Mr. Greenspan predicted that the economy would pick up for the rest of the year without an uptick in inflation.

Despite higher rates, however, mortgage bankers may be helped - at least in the short term - by procrastinating borrowers, who have been forced into a decision by the higher rates.

For example, volumes have been flat for the past two weeks at Inland Mortgage Corp., Indianapolis.

Inland's volume has stayed flat at about $70 million in the last two weeks, according to Ken Block, first vice president.

At Crestar Mortgage Corp., Richmond, Va., weekly volumes fell 15% two weeks ago, as rates first rose. But last week, volumes recovered somewhat, according to Alex Jacobs, vice president of the Midwest region.

"When economists think that rates are going to fall from now until the end of the year, a lot of borrowers kind of hold back" to pick off the lowest rates, explained Mr. Block of Inland. "When rates go up, borrowers think ... maybe it's best to do it sooner rather than later."

The effect is definitely temporary, but it helps, added Mr. Jacobs of Crestar.

In any case, analysts and mortgage bankers like to remind consumers that at 8%, a home loan is not expensive.

Rates went up to 9.41% in December, Mr. Gumbinger of HSH Associates pointed out. And in the 1980s, the lowest they ever got was 9.1%.

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