Washington area banks and thrift institutions yesterday reported heavy response on the first day of sales of money market certificates. These new six-month savings instruments, which have a $10,000 minimum, are pegged to the average 26-week Treasury bill discount rate. This week's rate is 7.16 percent.

Not all funds spent for the new certificates represent a plus for the banks and S&Ls, however, because some customers pay for them with money withdrawn from accounts paying lower interest rates. When that happens, the bank or S&L involved comes out behind. The share of new money received for the certificates ranged from 30 to 90 percent at the area financial institutions surveyed. Most said half of the money received for the certificates represented new business. The money market certificates were created to attract funds away from other types of investments and toward the hard-pressed mortgage market.

Lynn Dangelmaier, an assistant vice president of Dominion Naitonal Bank in Virginia, siad a number of customers had bought in as much as $100,000 certificates. Normally certificates of deposit of more than $100,000 are sold on a short-term basis at a negotiated rate. Dangelmaier, said some buyers were attracted by the six-month guarantee because they fear a downtown in interest rates.

He added that others were purchasing money market certificates in place of Treasury bills which they were in the habit of buying through his bank.

Thrift institutions are allowed to pay one-quarter percentage point more than the Treasury bill rate. The effective yield can run up to 7.8 percent, depending on how frequently interest is compounded. If taxes are not a factor, an S&L certificate will generate a higher gross yield than a Treasury Bill; a bank certificate yields less. Treasury bills are not subject to state and local taxes, but money market certificates are fully taxable.

In addition to the Treasury-linked certificate, banks and thrift institutions also can offer 8-year $1,000 certificates, bearing interest rates of 7 3/4 and 8 percent respectively. There appeared to be little interest in these CDs yesterday.

Washington & Lee Savings Loan Association Vice President Joe Alexander reported that two-thirds of the money invested in money market certificates on the first day was existing money. "My guess is that 5 1/4 percent money (the passbook rate) will be going into (these certificates," Alexander said. "That will drive up the cost of (mortgage) money."

At Perpetual Federal Savings & Loan Association, which reported a "heay response," the bulk of the transactions involved old customers rolling over their funds. Eighty percent of them purchased the minimum denomination certificate. However, at American Security Bank, Tim Holland said all the certificates were in larger denominations. He added, "We are very gratified by the very large number of others." Also expressing satisfaction were County Federal Savings & Loan Association of Rockville and [WORD ILLEGIBLE] Savings & Loan Association of Virginia.