Interest rates on 30-year fixed-rate mortgages in the Washington area are expected to remain around 10 1/2 percent and 11 percent for the remainder of the year. But there's no telling where they might go after Jan. 1, economists and housing experts said this week.

Mortgage interest rates skyrocketed to more than 13 percent in some parts of the country in September, but the Oct. 19 stock plunge has helped bring rates to below 11 percent -- the first time since Sept. 9.

But economists, many of whom were predicting a continuing rise in rates until at least next March, said they are unsure what to expect.

"It's a very volatile time," said John M. Teutsch Jr., president of the Mortgage Bankers Association of America. "There's a lot of psychological uncertainty."

The continued instability of the stock market, the weakening dollar and the lack of a clear policy to reduce the federal budget and trade deficits are still creating concern about what is going to happen with the economy and interest rates, experts said.

However, Teutsch and others said that if a person can afford to buy, he or she should not try to speculate on whether the interest rates might be lower tomorrow than they are today.

"There's no reason to hold back," he said. "There's nothing on the horizon that says that housing costs are going to change drastically. And with the {interest} rates lower, it just makes housing more affordable."

Even with the stock market plunge and other economic conditions, the trend toward lower rates during the last two months of the year is nothing new, said Robert K. Heady, publisher of the Bank Rate Monitor, which surveys interest rates of banks and thrifts around the country. November and December tend to be slower sales months for real estate, Heady said.

"There are two forces at work," he said. "There is a down cyle of all interest rates, and mortgage rates generally decline as much as two-thirds to three-quarters of a point as you go into the winter months."

Heady said adjustable-rate mortgages remain attractive because there is still a spread of nearly 3 percentage points between the 30-year fixed-rate mortgage (averaging 11.21 percent) and the one-year adjustable-rate (averaging 8.2 percent). As long as rates stay low, the adjustable mortgages are expected to remain popular. The decline in rates on Treasury bonds and notes by more than 1 percentage point during the past two weeks led to the drop in mortgage rates because many lenders use the Treasury indexes to set mortgage rates. The recent cut in the prime rate from 9 percent to 8 3/4 percent will help stabilize rates and is expected to soothe consumers who may be hesitant about making large purchases.

In an effort to get more aligned with the declining mortgage interest rates offered by lenders around the country, the Veterans Administration this week lowered its maximum interest rate for federally backed home mortgages to 10.5 percent, a one-half percentage point decrease. It was the first such rate reduction in 10 months.

Conventional fixed-rate mortgages, which are not backed by federal guarantees, dropped to 10.79 percent after peaking at 11.58 percent on Oct. 16, according to a survey done by the Federal Home Loan Mortgage Corp.

Rates on Federal National Mortgage Association (Fannie Mae) loans also have followed the downward trend, dropping nearly a percentage point during the past two weeks.

Martin Regalia, chief economist for the National Council of Savings Institutions, said that he doesn't expect any further decline in interest rates and that the housing market should not suffer. He said he expects the rally in the bond market to subside, but growing concern about the strength of the dollar and the threat of a recession will have a significant effect on where interest rates will go next, he said.

"When you're buying a house, the interest rate is an important variable, but so is the perception of your income," he said. "So far, consumers haven't held back because of any feeling that they they will be out of work.