BANKING/FINANCE

Back in June, a month after interest rates jumped about two percentage points, Sterling Savings & Loan Assn. started offering an adjustable-rate mortgage that borrowers could convert at low cost to a fixed-rate mortgage anytime during the first three years.

The “trustable adjustable,” as the Irvine-based S&L; tagged its product, has accounted for 25% of its loans--about $5 million--in only three months. And it is spurring other Orange County savings institutions to offer similar loans, said Donna Sligar, Sterling’s senior vice president.

The idea is not new--a Washington-based S&L; offered a convertible loan to California residents two years ago--but Sterling was the first Orange County institution to offer one, Sligar said.

“It lets the borrower watch market conditions and decide whether to change to a fixed-rate loan,” Sligar said. “There’s a $300 to $400 fee for the paperwork, recording fees and title changes, but the borrower doesn’t pay anything if he decides to pull out the day before the closing.”