Maryland Gov. Harry R. Hughes is expected to sign a bill today lifting the state's 10 percent ceiling on home mortgage interest rates, allowing hundreds of prospective Maryland home-buyers to apply for 90 and 95 percent mortgage loans as early as Monday.

The emergency bill passed Wednesday by the Maryland lesiglature will become effective immediately when Hughes signs it. Almost as quickly, home mortgage rates are expected to rise to between 10.25 and 10.75 percent, Maryland lenders predicted yesterday.

Not only will more people be able to buy homes, but the bill is expected to pump up the deflated real estate and housing industries and provide more revenues to the state through more transfer, recordation and property taxes associated with home buying.

The state's lenders have claimed that the low ceiling made it unprofitable for them to grant mortgages because they find more profitable ways to invest their money.

The lenders said they could afford to grant only mortgages with 30 percent or more as a down payment, which eliminated many buyers from the housing market. The homebuilding industry predicted that fewer houses would be built and that as many as 60,000 workers would lose their jobs if a relief bill was not passed.

Despite claims by lenders that they also needed to eliminate the prohibitions on points, the legislators voted to continue the prohibition. A point is a surcharge equal to one percent of the mortgage and is paid to the lender at the time of settlement.

The low down payment mortgages will return "as soon as banks and savings and loans determine what the rate will be," said William K. Weaver, spokesman for the Maryland Bankers Association.

Lenders yesterday said that rate is determined by the amount of profit lenders expect to get by providing mortgages and by comparing rates elsewhere. Rates in Virginia, which has no ceiling, and the District, which has an 11 percent ceiling, range between 10 3/8 and 10 3/4 percent.

The lenders said that the interest rate should go no higher than 11 percent this year in Maryland if economic conditions remain the same.

Although the bill will become effective immediately upon its signing, Lee Straight, a spokesman for the State of Maryland Institute of Home Builders Inc, said it will be three to six months before housing starts increase.

"Most builders move only 10 to 20 homes a year," Straight said. "A lot have been having real problems with the banks" threatening their own businesses.

The builders have to plan their projects and buy tracts of land before more starts can begin, Straight said. "It's still going to be a slow process."

The number of contract awards made for residential housing last year fell to 27,306 dwelling units from 29,105 the previous year, according to state figures. But the decrease could not be blamed solely on the usury rate, a state analyst said.

Lenders and persons in the real estate industry could not estimate yesterday how many prospective home buyers will flood the banks and real estate offices.

The real estate business had not yet been hurt "to any great extent" by the 10 percent ceiling, said Edgar C. Hilley, executive vice president of the Maryland Association of Realtors, because the credit crunch occurred so quickly.

Hilley said the expected higher interest rates "are a bargain" compared to many other investments and the higher rates wouldn't deter prospective home buyers.

"Obviously the lifting of the ceiling relieves a real crisis that affected the people wanting to buy homes, sell homes, realtors and areas of government," said Michael Milton, assistant attorney general counsel to the State Department of Economic and Community Development. "It was obvious people were hurting."