Confronted with the decline and fall of the long-term, fixed-rate mortgage, U.S. commercial bankers also must accept the fact that banks as they now exist will not be around much longer.

That was the message at an American Bankers Association meeting here this week on real estate finance, a topic that has given the industry a collective case of the jitters. The main cause for concern: the newly approved adjustable rate mortagae, a lending instrument that as yet does not have real identity but which has become the type of financing most lenders must start using sometime this year if they are to continue to do business.

While the ABA has welcomed the new rate concept, individual bankers still are struggling to devise a system, based on a choice of official indexes, that they believe their customers will accept.

Commercial banks, backers of a fifth of the new mortgages written last year, probably won't exist in their traditional form by the mid-1980s because the class distinctions between savings and loan associations, mortgage bankers and themselves are rapidly disappearing, the bankers were told.

Increasingly, for instance, commercial banks will no longer hold onto the loans they make, selling them instead in the secondary market the way mortgage bankers do to free up money for lending, experts predicted. At the same time, they noted banks will seek broadened powers as they look for new ways to make money -- and to compete with S&Ls -- by becoming real estate brokers, managers, partners with developers in joint ventures, escrow collectors and mortgage services for investors. Many bankers say they already have been forced into some of these new functions.

"We've had to become more sophisticated and concentrate on things we've never thought about before, " acknowledged John D. Pollard, senior vice president of National Savings and Trust Co. of Washington.

The evolution of commercial bankers into mortgage bankers is well under way, said Charles Effinger Jr., vice president of Equitable Trust Co. of Baltimore. Most of the 350 bankers attending this week's conference "didn't know what the secondary market was up until a few years ago," he observed. "The wave of the future is selling in the secondary market. We basically don't make loans we can't 'lay off" to larger investors.

While some speakers said the shift to new types of lending is a matter of survival for their industry in light of the unpredictability of interest rates, others insisted that no funeral arrangements are being made.

"We're here to talk about opportunity," said R. Van Bogan, chairman of the ABA's housing and real estate finance division. At the base of this opportunity, some speakers said, are changing consumer expectations about housing.

Buyers of the '80 will adjust to the high cost of housing and mortgage credit by allocating a higher percentage of their income to homeownership and by accepting a smaller, less expensive house, said Kenneth J. Thygerson, former chief economist for the U.S. League of Savings Associations and now an S&L and mortgage banking executive in Denver.

He cited instances in which at least one lender has allowed buyers to spend 41 percent of their income on mortgage cost, a percentage long thought acceptable in European countries such as West Germany but consideralby higher than the fourth-of-income standard once used by U.s. lenders.

Homeowners also will use mortgage credit "more sparingly than in the past," he predicted. Where they once might have used excess mortgage credit for other purposes, such as educational costs or consumer goods, the high cost of borrowing and the variable terms will force them to cut back on that, the S&L executive said.

To compete with so-called "creative financing" arranged between buyers and sellers -- which facilitated an estimated 70 percent of the sales of existing houses last year -- bankers will be making loans available on terms of one to five years, Thygerson said.

At the time, he noted, many institutions simply may choose to eliminate real estate finance from their "product offering" because of the complexities of the new types of loans and will "re-deploy assets and staff resources to other activities."

While the comptroller of the currency gave nationally chartered banks the authority to issue adjustable-rate mortgages last month, few banks across the country are offfering them. The lenders have been told they can, in effect, design their own loan structures based on Treasury bill or longterm contract mortgage rates, but many have been waiting to see what the Federal National Mortgage Association, the largest investor in the secondary market, chooses as its preferred standard.

Fannie Mae's executive vice president, David M. de Wilde, indicated here that his corporation is eyeing the three-year Treasury rate, but is "looking hard at a system of payment caps." A decision will be announced early in the summer, he said.

In the meantime, few banks and S&Ls in the Washington area appear to be making home loans. Pollard of NS&T called the situation "frustrating" for lenders as well as potential home buyers and sellers. His bank, historically the largest real estate lender among the city's banks, has made fewer than a dozen loans this year, to people who were "desparate" and willing to pay interest rates of 17 to 18 percent, he said.

Effinger of Equitable Trust, which does business largely in Baltimore, the Maryland suburbs of Washington and the Eastern Shore, said his bank placed $3 million in long-term, fixed-rate loans in a recent two-week period at 14 1/2 to 15 1/4 percent plus two points but then had to raise rates to 17 percent when the VA/FHA rate was boosted.

As a state-chartered bank, Equitable will have to wait for enabling legislation to offer adjustable rate mortgages, he said. National banks are allowed to increase interest rates on the new mortgages by as much as 2 percent a year, and there is no limit to the amount rates can be increased over the life of the mortgages.

While his bank waits for authorization, "the idea is to come up with the gimmick to provide your customers," he said, and not necessarily to invite new business when money isn't available to lend.

Bankers at the conference here agreed that finding the best way to explain the complicated new mortgage choices to customers was going to be tough -- a criticism consumer advocates have had all along -- and at least one participant confessed that his staff had flunked a test on the subject despite a training program.

Addressing other trends in real estate, M. Leanne Lachman, president of a real estate research corporation associated with First Chicago Corp., told the bankers that joint ventures between lenders and developers will be the standard structure for development deals in the 1980s. Based on interviews with industry leaders, Lachman predicted an overall trend to 50-50 sharing of profits between developers and investors, "with the investor more often than not being a lender."

Lenders will take their profits first, "before the developer gets any," she said, an arrangement developers will have to put up with if they are to get any long-term financing.

The big new institutional investors, surpassing insurance companies, are securities firms and pension funds, Lachman said. Foreign investors are so much a part of the market that they are being "taken for granted," she said.

At the same time, the researcher expressed concern that "too much money will pour into real estate too quickly now that the capital market has been thrown open." Lachman said she could "say absolutely that the real estate busts have all occurred when uniformed money has flowed too enthusiastically into the industry. If financing is available, developers will build empty buildings -- as many banks and other lenders learned in 1973 and 1974."