What's a house-hunter supposed to do now?

The average interest rate on 30-year fixed-rate mortgages rose to 7.89 percent this week, a record high for 1999 and the highest rate in the past two years. The rate was 7.70 percent last week.

So should buying plans be put on the back burner?

Not necessarily, economists say.

"Rates are rising, but they're still relatively low," said Robert Barr, senior economist at mortgage giant Fannie Mae. "It's still time to go ahead with plans to buy."

Robert Van Order, chief economist at Freddie Mac, the other mortgage heavy, said: "You may be kicking yourself that you didn't jump in a few months ago. But 8 percent is still relatively low by historical standards. And with the mortgage tax deduction you're getting, you're really only paying about 5 percent."

Whew, that's a relief. So, it's still an okay time to buy, in terms of mortgage rates. And there are several ways, even with spiked-up rates, to get a decent rate (All right, it won't be as good as what your neighbor got last October) and so keep monthly payments manageable.

Some tips:

* Don't panic, advises New Jersey-based HSH Associates, a mortgage research firm. "Mortgage interest rates are notoriously fickle," HSH Vice President Keith Gumbinger said. "While it's true that interest rates rise more quickly than they fall, even a sharp jump in one day or week can be erased over the next week or two."

And many economists still believe that mortgage rates will fall in the second half of 1999. "We expect rates to decline," Fannie Mae's Barr said. "We think it's obvious that the economy is moderating, that inflation is not a big threat, and mortgage rates are a little high right now given the rate of inflation."

* Consider an adjustable-rate mortgage. ARMs allow a home buyer to get a lower rate for one, five or 10 years. The rate may go up after that, but considering that the average life of an American mortgage is eight years, an ARM might be the right product at the moment.

Americans already are turning to ARMs in greater numbers. In June, 22 percent opted for an ARM, double January's 11 percent, a study by the Federal Housing Finance Board showed.

* Pay more points to lower the rate. "If you've got a couple thousand dollars lying around," Gumbinger said, "it may be worth your while to buy down that interest rate." He said Americans generally are averse to putting money down--or paying points--to borrow money, but now may be the time to consider it.

* Put down a bigger down payment. With a 20 percent down payment homeowners avoid private mortgage insurance. They also lower the mortgage amount and the monthly payments.

* Buy a cheaper house. "Some people will pay the higher rate," Freddie Mac's Van Order said, "and some people will buy a smaller house than they would have."

HSH's Gumbinger said: "Good luck buying a cheaper house. House prices have been rising. The number of houses for sale has been falling. What's probably left is the more expensive housing.

"You may have to just dash that dream of a two-story detached bungalow with a separate garage and just go for a town house," he said. "That's hard for people, though. They get their heart set on what they want."