MORTGAGE RATES FELL sharply in early June, posting the largest month-to-month decline in more than two years, with fixed-rate mortgages averaging 12.86 percent, down from 13.49 percent in May, the Federal Home Loan Bank Board said this week.

The May-June decline, almost twice the size of the April-May drop, was the largest since late 1982, the bank board said. Rates on adjustable mortgages also fell sharply in early June, dipping to 10.88 percent, down from 11.35 percent the month before.

Also this week, the Federal Home Loan Mortgage Corp. found commitment rates for 30-year fixed-rate mortgages averaging 12.08 percent nationwide, the lowest level since October of 1979.

Analysts said that mortgage rates, which have generally been falling since last summer, are now at their lowest levels in five years.

Warren Lasko, executive director of the Mortgage Bankers Association of America, said he expected the bank board's figures for early July would show that fixed-rate mortgages have dropped even more, to about 12.25 percent. While he did not forecast any further declines from the 12 percent to 12.25 percent level, he said this range would be enough to boost housing sales in coming months.

"Our members are experiencing a tremendous increase in applications for mortgages. It looks like housing is going to be the one sector of the economy that is going to do well this spring and summer," he said.

James Christian, chief economist for the U.S. League of Savings Institutions, also predicted that mortgage rates would not fall from their current levels over the next two or three months. He said what happens beyond that point will depend on the overall state of the economy. He said further anemic growth would send interest rates lower, but a pickup in activity, which he expects, would push interest rates higher.

The 12.86 percent level for fixed-rate mortgages in June was based on a loan of at least 25 years for a new home with a 25 percent down payment.

The adjustable-rate mortgage was for variable rate loans with a cap on how much interest charges can go up. This category represents the great bulk of adjustable-rate mortgages being offered.

Another category of adjustable-rate mortgage, with no cap on how much rates can change, also declined in June to 11.07 percent from 11.54 percent in May.

RESIDENTS OF SEVERAL McLEAN-area neighborhoods are up in arms over road improvements included in the proposed development for the West Falls Church Metro Station.

During an emotionally charged meeting at Haycock Elementary School this week, residents vowed to jam Monday's public hearing on the proposed Metro station plan before the Fairfax County Board of Supervisors unless certain transportation proposals are deleted.

Residents of the Lewinsville Road, Haycock Road, Great Falls Street and Kirby Road areas were urged to call and sign up to testify at the public hearing.

Residents are angry over proposals to make Haycock Road and Great Falls Street four lanes wide. Proposals calling for those changes are included in plans for the station. That study was approved recently by the Fairfax County Planning Commission.

Residents are asking Dranesville Supervisor Nancy Falck, within whose magisterial district the station lies, to ask for a deferral on action on the two road widenings. Residents have been calling supervisors all week to stir support for their position and met midweek with board Chairman John F. Herrity.

The West Falls Church Metro station is located in a triangle created by I-66, Rte. 7 and Haycock Road near the Falls Church City limits.

Making Haycock Road four lanes has been in the county's long-range comprehensive plan for many years. Falck said earlier this week that she plans to ask that improvements to Great Falls Street be deleted from the study. She said a decision on the future of Great Falls Street would be "premature" at this time and that there is no money to build a road anyway.

"The earliest opportunity to improve Great Falls Street would be five years from now," Falck said. "It is not part of the November bond referendum." The next bond referendum would be five years away, officials said.

She said that will give county officials time to evaluate the traffic impact of the opening of the Metrorail station, which is now scheduled for mid-1986. However, Falck said, "The major entrances and exits to the Metrorail stations are on Haycock Road. People coming from all directions will be using Haycock Road," she said.

Judy Seiff, a member of the citizens task force involved in preparing recommendations for the station, said land-use density proposed will help preserve existing family neighborhoods. The study calls for limiting building heights in the area to six stories. But Seiff said proposed road widenings are "extremely dangerous for our neighborhood.

"The board of supervisors has been totally unsympathetic, thus far," she said.

"There is no need to pave over our yards for traffic jams that well might take place in the year 2000," Seiff said. Bill Sutcliffe, a resident of the El Nido subdivision, said a deferral is needed because "we want time to get our ducks in a row."

Lynn Clipp of the Lewinsville area said Falck could get the road proposals deferred by the supervisors. "If she wants it deferred, they would defer it," Clipp said, referring to general board policy of bowing to desires of individual supervisors on projects in their own districts.

Residents said providing turn lanes on Great Falls would be far better than widening it.

DEVELOPERS OF WESTFIELDS, a 1,100-acre office park on Rte. 28, south of Washington-Dulles International Airport, this week began construction of the first phase of a $27 million road network that will serve the office park and portions of western Fairfax.

Westfields is being developed by a newly formed partnership between the Henry A. Long Co. and the real estate subsidiary of Perpetual American Bank. The Long Co. several months ago announced plans to build the massive office park. The partnership of Perpetual American was revealed this week.

When completed, Westfields will be worth some $2 billion, according to Long Co. officials.

Construction will take place over a 10- to 15-year period.

IN THE BUSINESS . . . Herman I. Porten and Richard A. Sullivan of the Porten Sullivan Corp. and Alan P. Kurland, former president of Tartan Development of Maryland, have formed Dover Development Corp. With Kurland as president, the firm will be involved in all aspects of real estate development and income property acquisition here and in Florida . . . A subsidiary of Costain Limited Inc. and the Adler Corp. have formed a land-development joint venture to be called the Costain/Adler Limited Partnership . . . The George Hyman Construction Co. has topped out the first phase of 1001 Pennsylvania Ave. for Cadillac Fairview Urban Development Inc. Ultimately, the 14-story, 795,000-square-foot project will occupy the entire block between Pennsylvania Avenue and E Street NW and 10th and 11th streets NW.