Washington area savers flocked to local thrift institutions yesterday to buy money market certificates before next week's government mandated interest rate reduction. But some local savings and loan officials warned that despite the rush, area mortgage money would soon dry up.

Federal lending regulators announced late Thursday that as of March 15 savings and loan associations that have been paying an effective compounded rate of as high as 10.3 percent can henceforth pay no more than 9.4 percent on the same $10,000 investment, based on current rates.

At American Federal Savings and Loan Association, president William Sinclair reported that business yesterday was up 50 percent over the previous day. "Washington area residents are known as sophisticated savers," he said.

It is this financial savvy that is going to lead to more disintermediation, bankers and thrift officials warned yesterday.

Money market mutual funds paying 10 percent are already absorbing funds. And when Washington investors discover they can get a better yield from Treasury bills because they are free of state taxes, they are bound to withdraw their funds on maturity out of savings and loan associations. In other areas where Treasury bills are more difficult to purchase, the outflow may not be as great, they added.

Disintermediation inevitably means the drying up of mortgage and construction funds. John Herbert, vice president of Annapolis Federal Savings and Loan, complained, "We have no money to lend at it is. After withdrawals we could be out there hanging dry."

Herbert expressed surprise at the administration's latest move to tighten the monetary purse strings, as did Howard Millner, senior vice president of National Permanent Federal Savings and Loan. "It's a good thing I read the paper before customers started calling," he said, referring to the late afternoon announcement.

There also appeared to be confusion about one provision of the regulation involving the 0.25 percent "differential" that savings and loans may pay over rates paid by commercial banks. The regulatory agencies wiped out the differential for money market certificates paying over 9 percent. If the rate is under 9 percent, the differential may be added provided the total does not exceed 9 percent. If for example, the discount rate for Treasury bills (on which the money market certificate rate is based) were 8.9 percent, only a 0.1 differential would be permitted.

Bankers appeared more sanguine about the regulatioin change, undoubtedly because they are not so heavily involved in mortgage lending and therefore will suffer from disintermediation if it occurs.

Many banks now offer money market certificates at Treasury bill discount rates without compounding, so there will be no change for them. "It won't affect our mortgage lending," said Henry Ravenel. senior vice president of Riggs National Bank.

Joseph Malone, president of Dominion National Bank, praised the administration's move and said it would result in lower costs for S&Ls and lower mortgage rates.