The D. C. City Council voted yesterday to remove for 90 days all limits on interest rates for mortgage loans in the city in a controversial effort to encourage lenders to makes housing loans available in the District.

Money for housing loans in the city has virtually dried up because of the city's current usury rate limit of 11 to 12 percent. In addition, lenders here have found the suburban markets more attractive for loans because there are no limits to interest rates in either suburban Maryland or suburban Virginia.

The surprise council action must still be approved by Major Marion Barry if it is to become law. Barry was out of town yesterday and aides would not comment on the legislation in his absence.

Because it was passed as emergency legislation -- without public hearing and without provisions for congressional review -- the law, if signed would remain in effect for only 90 days. However, it could be renewed. Some emergency legislation has remained in effect for a year or more through successive renewals.

Real estate agents, savings and loan representatives and supportive council members -- includng Betty Anne Kane, the measure's sponsor -- predicited that the action would increase fhe flow of mortgage funds in the city.

"The effect of this is that loans will be made, money will be plentiful," said James G. Banks, executive vice president of the Washington Board of Realtors. City real estate agents have long supported an end to the interest rate ceiling.

The District now has an 11 percent interest rate limit on first mortgages and trusts, an 11.5 percent limit on second trusts and a 12 percent limit on loans made to purchase cooperatives.

Kane and other supporters of the legislation argued that interest rates in the Maryland and Virginia suburbs as well as the interest rates in secondary markets, where lenders must sell mortgages in order to obtain more money for loans, have exceeded the District's rates. This has made the city less attractive than the suburbs in the competition for housing money.

Opponents of the measure said they feared that interest rates could skyrocket if not checked by a legal ceiling.

"With no limits, the lenders can just let the interest rates go to the sky. The situation that exists now will just get worse," said Micheal Williams, chairman of the Citywide Housing Foundation, a tenant-oriented group.

Banks and Bruce Byran, executive vice president of the Metropolitan Washington Savings and Loan League, said that interest rate probably would not rise beyond 12 percent by mid-October, when the measure would come up for renewal if it is signed into law.

They had no rebuttal, however, for another contention of opponents of the Kane bill, who argued that higher interest rates would make it more difficult for lower-income persons to purchase homes.

"There's no question about the truthfulness of that point, but the question is whether the whole market is going to be stopped in its tracks because of that factor," Banks said. "Everything is more difficult for poor people during an inflationary period. It's hard for poor people to buy shoes and food."

Bryan said, "Even if the rate were left at 11 percent or even if it were at 8 percent, could poor people buy now?"

The council's action came on a 6-to-3 vote. Joining Kane in voting for the measure were Polly Shackleton (d-Warn 3), Charlene Drew Jarvis [D-Warn 4], Jerry A. Moore Jr. [R-AtLarge], John Ray [D-At Large] and Chairman Arrington Dixon.

David A. Clarke [D.Ward 1], Wilhelmina J. Rolark [D. Ward 8] and Hilda Mason [Statehood-At Large] opposed the Kane proposal.

John A. Wilson [D-Ward 2] and Nadine P. Winter [D-Ward 6] voted "present on the Kane proposal when it was first made in the form of an amendment. Later, when the bill putting the measure into effect was voted. on, Wilson and Winter joined the pro-Kane forces.

When the session began, most council members had expected to vote on a proposal by Wilson to raise the rate limit to 15 percent. But before that measure could be acted upon, Kane proposed to remove the limit entirely.

"I'm flabbergasted, flabbergasted," said Mason, her voice breaking with emotion, as she criticized the council for considering the legislation without a public hearing. "There is no way this council can face the people and say, I supported taking the ceiling off without a hearing or a round-table or anything.

"I think what we are doing up here is jive. This is jive," Mason said

Since talking office January 2, Kane has been one of the most persistent critics of the council's use of its emergency legislative powers. She said yesterday that she saw no contradiction between that criticism and her proposal to remove the limits through emergency legislation.

"Since it was clear we were going to do something and there was emergency legislation before us, I think it needed to be amended," Kane said, noting that other council members had initiated the requests for some kind of emergency legislation.

In considering many housing issues in the past, City Council has been divided between those who support the real estate industry and those who support tenants.

Yesterday's action, however, was unusual because it was sparked by the inability to obtain mortgage financing on the part of several tenant groups that were trying to purchase buildings that are being converted into condominiums or cooperatives.

If the major does not act on the bill or does not allow it to become law without his signature before the council's next meeting, scheduled for July 17, a request for reconsideration is possible. One such request failed yesterday.

Yesterday's seeission marked the return to public life of council member John A. Wilson, who dropped out of sight a week ago after threatening to resign from the council an then backing down from his treat.

Wilson entered the council chambers at 10:17 a.m. sucking on a red lolipop and smiling at reporters. He refused to say after the session if he would resign or to discuss where he had been. During the meeting, Wilson repeatedly sucked on lollipops and at one point complained to an aide that the bright television ligths were too hot.