When mortgage interest rates went down, business went up for Clara Sachs. Now the phone rings constantly, contracts are piled up and her appointment book is packed.

"I've been working 80 hours a week for two months," said Sachs, a senior loan officer at Developers Mortgage Corp. in Bethesda. "We got 800 calls in this office on one day."

It's the same story nationally at most financial institutions offering mortgage loans. The reason: Interest rates on fixed-rate mortgages have dropped below 10 percent for the first time in seven years.

People shopping for homes and homeowners seeking to refinance their mortgages are flooding mortgage companies and other financial insitutions with inquiries about interest rates.

"We're returning phone calls within 24 hours," said Sachs. "I used to return them within an hour, then I stretched it to some time that day. Now I do well to return it within 24 hours."

She estimates she gets 50 calls a day herself, and she has a train of adding machine tape to prove it. Callers generally ask her to figure out what would be the difference between their old and new monthly mortgage payments if they refinance.

While the rush has intensified in the last two weeks, business at the mortgage company actually picked up just before Christmas, when the public finally got the news that rates were going down, the loan officer said.

"I had four appointments on New Year's Day, people wanting to refinance their mortgages," Sachs said. "Now the calls are split 50-50, between people wanting to refinance and people making new purchases.

"Rates are so good now that homeowners with 12 1/2 percent government loans might save $170 a month by refinancing," she said. "First-time buyers can buy almost $20,000 more house than they could get a year ago.

"It could be the difference between living an hour outside D.C. and living 40 minutes outside the city."

Everybody is refinancing, "from the person who owns the $500,000 home to the $60,000 condo owner," Sachs said. "Whoever said no one was buying houses when the interest rates were up was wrong . . . . I can't believe the number of people who bought houses at interest rates over 13 percent."

Eleanor Lilienfield, a real estate agent for Shannon & Luchs Co. at Dupont Circle, refinanced the mortgage on her Georgetown town house two months ago. Lilienfield and her husband, a doctor and Georgetown University professor, paid $285,000 for the house 4 1/2 years ago, she said.

"We had a 13 7/8 percent interest rate for 30 years and paid about $2,500 a month," Lilienfield said. After refinancing, she got a 15-year mortgage at 11 percent and her monthly payments were reduced by $100 to about $2,400.

But getting past the inquiries and through the paper work and the settlements is keeping loan officers and other employes in mortgage company offices busy, busy, busy.

"It's crazy!" offered one breathless receptionist at Traveler's Mortgage Services in Rockville. "People are calling three or four times a day and leaving messages for loan officers."

The question everyone asks: "What are the rates?

"We have 12 incoming lines and all of them are usually lit up," she said. "It's very, very unusual."

At S&L Mortgage Corp. in Rockville?

"It's havoc!" said the S&L receptionist. "I took 120 calls yesterday."

People are so anxious about taking advantage of the plummeting interest rates that Sachs has even had a few customers walk into her office without appointments.

"They call on Saturdays and Sundays, too," she said. "We have people working here in the office weekends, trying to catch up on the paper work."

For a while, clients were having a hard time reaching Sachs at home because she was always at the office.

"Finally, I changed my phone recording to say, 'If you're calling me anytime before midnight, try me at my office; I'm beginning to spend a lot of time there.' "