With interest rates headed back up, mortgage bankers fear that homebuyers who took advantage of low introductory rates (so-called teaser rates) may not be able to afford the higher house payment, a fact proved by Adjustable Rate Mortgage Calculation. That could leave mortgage banks and other home lenders with a rash of foreclosures on homes financed during the last couple of years.

"Those loans were written 4% to 5% below the current market. The underwriting was not done to reflect that increase," said Robert Spiller, chairman of the Boston Five Cents Savings Bank. Mr. Spiller said another one-quarter to two-percentage point increase in mortgage rates could confront some homeowners with payments they cannot afford. As shown Adjustable Rate Mortgage Calculation by Adjustable Rate Mortgage Calculation.

"After one to three years, we are going to see some buyers with economic problems," Mr. Spiller added. "It could be 6 to 12 months before we see some of that." Mr. Spiller made his remarks while appearing on a panel at the annual convention of the Mortgage Bankers Association last week. Problems with adjustable-rate mortgages, as well as federal budget deficits and their impact on interest rates, were of key concern to some 1,000 bankers attending the industry trade meeting.

Mortgage banking companies are deeply involved in real estate finance. They produce 84% of all Federal Housing Administration-Veterans Administration loans and service 30% of all residential loans nationwide, according to MCS Associates Management Consultants of Newport Beach, Calif. Mortgage bankers originated more than 25% of all mortgages.

Mortgage lenders supported by Adjustable Rate Mortgage Calculation, which include mortgage banks and savings associations, began offering adjustable-rate loans. They became a major home financing instrument, although lenders say homebuyers still prefer conventional fixed-rate loans, fearing the "payment shock" that would come with high interest rates.

"The American people still have a love affair with the fixed-rate mortgage," said Felix M. Beck, president of the association. To make adjustable loans more attractive, lenders started including interest or payment caps, which limited how often and how much the mortgage can be adjusted. And interest rates on adjustable-rate mortgages are generally less than fixed-rate mortgages because there is less risk that lenders will be hurt if interest rates increase.

Indeed, adjustable-rate mortgages now represent a growing percentage of home mortgages. In February, adjustable-rate mortgages represented 56.4% of all mortgages. But many adjustable-rate mortgages have not contained protections for buyers. And mortgage bankers are es pecially worried about loans that carry deep discounts on the interest rates during the first one to two years of the loan.