Margaret Steen wakes up most mornings with mortgage interest rates on her mind.

By 8:30, she makes the first of the usual calls -- to Inland Mortgage, Citibank, Prosperity Mortgage. Often, she gets rate sheets faxed to her house. By the time she meets her first client, the Long & Foster Real Estate Inc. agent is armed with the latest in financing options and ways to beat the rates.

With mortgage rates rising and home sales falling, real estate agents like Ms. Steen are working feverishly for every homebuyer. And the key to survival is linking buyers with the right house at the precise moment rates fall into their comfort zone.

And it's no easier for lenders.

For years, loan officers have made the rounds to real estate offices to win referrals from agents. When Ron Dyson makes daily rounds these days, the Fleet Mortgage loan officer also stops at nonprofit groups and churches, which have programs to help low- and moderate-income people buy homes, and at hospitals and credit unions, where he can set up home-buying seminars for employees.

"This is the worst year I've seen in the real estate business," said Robert S. Ramsey, a senior loan officer with Performance Mortgage Co. in Lutherville. "You have to get out there and pound the streets and do networking through friends and other mortgage lenders. You try to go out and make as many contacts as possible and promote products that will get you business."

Average rates on 30-year mortgages in the Baltimore metropolitan region rose yesterday to 8.89 percent, according to HSH Associates of New Jersey, and experts predict they will rise above 9 percent next week.

For months, the steady rise from last September's record-low of 6.76 percent has taken a toll on the region's housing market, which has suffered declining sales for months.

Yesterday, the Greater Baltimore Board of Realtors said the number of contract signings in the region plunged 26 percent in September, compared with last year, and sales dropped 16 percent. The board's preliminary report included the city and all metropolitan counties but Carroll, for which statistics were not yet available.

For Ms. Steen, a top-producing agent for most of her seven years in the business, that kind of market has meant dropping everything when a lender calls to say rates have fallen half a point. She checks her list of rate-sensitive buyers, hooks up with one and suggests he clear his evenings for the week, if that's what it takes.

She pulls out cards from the late 1980s showing rates in the VTC double digits and reminds clients to think of what the market did and what it is capable of doing.

"I'll never just give in and say the market's doing bad," Ms. Steen said. "You can't. It's like riding a roller coaster in this business. When a buyer says he's worried about rates going up, you say let's get out there and beat the rate, if we have to look every night for a week or every Saturday and Sunday. When you find them the right house, the interest rate all of a sudden takes second place."

But for now, rates are prompting many would-be buyers to stay put, especially those who jumped on the chance to refinance to a lower rate last year or who aren't forced by a relocation or family circumstances to move, agents say.

That has led to several cost-cutting measures on the part of Ms. Steen's agency, Long & Foster. The company has asked all managers to cut expenses by 10 percent in areas other than agent support and marketing of properties. The company also intends to put off expansions and renovations, said Jack Queen, executive vice president for Maryland, Washington, Delaware and Pennsylvania.

"The downturn has really been the last two months, so it's a little soon to say it's going to be permanent," he said. "But we can't wait and see. We have to take measures."

He said he expects improvements in the spring, when the election will be over, when he predicts rates will have stabilized and when home shoppers typically emerge to look for homes.

Until then, "every agent will be working a little harder," he said. "Some agents will not make it and that's probably healthy. The better agents will get their share, while the agents not up to snuff will be pushed aside."

Lenders are trying to fight the downturn by offering a wider array of mortgage products than ever before, which should continue as rates continue to rise, said Keith T. Gumbinger, an analyst with HSH.

In recent weeks, mortgage companies have started offering loans with faster approval or with little or no money down, or with more flexible terms.

In addition, buyers are moving toward loans that are less expensive now but, perhaps, more expensive later. Adjustable rate mortgages have surged in popularity, along with fixed, buy-down loans, in which buyers start out with a lower rate in exchange for higher points, sometimes paid by the seller, or in exchange for a slightly higher-than-market rate later.

GMAC Mortgage is offering a loan that requires only 3 percent down; most loans require at least 5 percent. Next week, Prosperity Mortgage Co. will begin a fast-track loan approval program that guarantees a decision within three days from application.

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