Mortgage rates fall to a four-week low, but buyers still pull back

The already competitive housing market is getting even more so, and that is now cutting into mortgage demand.

Even a small drop in interest rates couldn’t bring more buyers in, although it did boost refinance demand slightly. As a result, total mortgage application volume last week was essentially unchanged, falling 0.6% from the previous week, according to the Mortgage Bankers Association’s seasonally adjusted index.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($548,250 or less) decreased to 3.27% from 3.30%, with points increasing to 0.41 from 0.39,…