Perpetual Federal Savings and Loan Association, the area's largest, yesterday lowered its mortgage interest rate below 12 percent for the first time in months -- from 12 3/4 to 11 7/8 percent.

Perpetual's action, which association president Thomas Owen said is an attempt to stimulate loan demand, continues the national and local trend toward sharply declining mortgage rates.

As lenders have lowered their rates, home sales have increased. But the sales are still lagging behind the pace of Washington's boom market of the last few years.

Perpetual appears to be one of several Washington area lending institutions with loan funds available at 11 7/8 percent interest, according to Victor J. Peeke, who surveys 222 savings and loans, banks an mortgage companies each week.

Peeke said the average interest rate charged in the area this week is 12 3/8 percent for home buyers who make a 20 percent down payment. Only two months ago, rates were averaging more than 16 1/2 percent.

Perpetual had a 17 percent mortgage interest rate as recently as April, and graudally lowered the rate to 13 percent last month. Owen said, however, that the lower rates did not attract many loan applicants.

"There's just really been a lack of demand," Owen said. The 11 7/8 percent money is available for 80 percent mortgages up to $93,750, he said.

Real estate people here say that many homes still are being purchased through owner financing, loan assumptions, or the two government-backed programs, FHA and VA. But the lower interest rates charged by conventional lenders has made it easier for many other families to afford homes, real estate brokers say.

About 500 more exisiting homes were sold last month than in April in the Washington area, increase of about 20 percent, according to information compiled by the local real estate boards.

May sales still represent a drop of about 37 percent compared with May of last year, however.

Sales of new homes jumped dramatically last month compared with April, said Renay Regardie, president of market research company specializing in new home sales.

Regardie said sales surged about 80 prcent higher than the April total. "April was the lowest month in years," she added.

For the year, sales of new homes are about 28 percent lower than last year, Regardie said.

Regardie, and real estate brokers, said many buyers apparently are still postponing buying, in the hope that mortgage interest rates will decline ever further.

"The don't want to be the dummy. They don't want to buy at 12 1/2 percent interest and they have their friends buy a month later and tell them they bought at 11 1/2," Regardie said.

William M. Ellis, vice president of the Shannon & Luchs real estate company, said that if the last half of June keeps pace with the first part, his company will have its best month ever.In June of last year, Shannon & Luchs had 533 sales. So far, there have been 280 sales worth $28 million during the first 15 days of this month, Ellis said.

At the Starlit Estates, a new subdivision built by Ryan Homes on the edge of Fairfax city, sales representative Bob Coursey said more homes have been sold this month than in March and April combined. Ryan has its own mortgage subsidiary and is offering 11 7/8 percent financing, as well as a special program in which buyers can get help with refinancing costs.

Coursey said 12 percent seemed to be the barrier that many buyers were waiting to see broken. "It's like the stock market," Coursey said, "you've got to know when to jump in and when to jump out."

It is impossible to predict at what point interest rates will level off as the recession continues, although some housing experts say they do not think the decline will last much longer or go much lower. It is possible that rates may begin to rise again near the beginning of next year, they said.