Home mortgage rates topped 17 percent nationally last week, demolishing previous records and signaling even harder times for the housing industry.

The soaring rates, product of a weak bond market and a cash-strapped savings and loan industry, toppled both weekly and monthly records.

The weekly report from the Federal Home Loan Mortgage Corp. showed lenders asking for an average basic interest rate of 17.11 percent, up from a record 16.88 percent a week earlier. And the monthly report from the Federal Home Loan Bank Board showed that lenders in early July were asking a record 16.95 percent effective interest, up from a revised record of 16.82 percent in early June. In the Washington area, lenders were asking 17.09 percent, down from the June figure of 17.15 percent. l

The figures apply to fixed-rate conventional loans, which aren't backed by the government.

Until recently, home sales and housing starts held up surprisingly well in the face of persistently high borrowing rates -- principally because of unconventional financing techniques. But industry analysts said the rates are finally taking their toll.

In June, sales of new homes plunged 17.2 percent to the lowest level since last year's housing recession. And builders started houses at an adjusted yearly rate barely above 1 million, also the slowest pace since the 1980 decline.

Peter Treadway, chief economist for the Federal National Mortgage Association, said housing starts probably fell below an annual rate of 1 million units in July. The figures will be released later this month.

Robert Sheehan, economist with the National Association of Home Builders, said housing starts haven't slowed further principally because builders have been subsidizing the initial mortgage payments.

The bank board said the latest increases in mortgage rates stem from the generally high level of long-term interest rates. They also reflect difficulties that savings and loan associations have had in attracting new deposits when money market mutual funds are offering higher returns to savers, the statement said. S&Ls originate nearly half of all mortgage loans.

One bright spot for the troubled S&L industry, however, was a continued increase in yields of mortgages that lenders actually closed and added to their portfolios.

The average effective yield on closed loans rose to 15.06 percent in early July from the previous record of 14.82 percent in June. In the Washington area, the effective yield was 14.29 percent, down from 14.84 percent in early June.

The effective rate is the basic rate charged in the loan contract, plus initial fees and charges amortized over 10 years. In July, the basic contract rate nationally on loans closed rose to 14.53 percent from 14.32 percent. In the Washington area, the figure was 13.73 percent, down from the June figure of 14.35 percent.