Homebuyer demand had mortgage lenders incredibly busy over the summer, but that may have peaked.Mortgage applications to purchase a home, which had fallen for four straight weeks, were essentially flat last week, rising just 0.2%, according to the Mortgage Bankers Association’s seasonally adjusted index.Refinances helped to push total mortgage application volume up 1.7% last week compared with the previous week.A slight drop in mortgage interest rates did the trick. The average contract rate for 30-year fixed-rate mortgages with conforming loan balances ($510,400 or less) decreased to 3% from 3.02%, with points decreasing to 0.35 from 0.36 (including the origination fee) for loans with a 20% down payment. That rate was more than a full percentage point higher one year ago.Applications to refinance a home loan, which are most sensitive to weekly rate moves, increased 3% for the week and were 80% higher than a year ago. The refinance share of mortgage activity increased to 66.7% of total applications from 66.1% the week before.Although mortgage demand from homebuyers was flat last week compared with the previous week, it was still 24% higher than a year earlier.Homebuyers are struggling not just with a record low supply of homes for sale but with fast-gaining home prices. This was apparent in the average purchase loan application size last week, which set yet another record high — $372,600.”These results highlight just how strong the upper end of the market is right now, with outsized growth rates in the higher loan size categories,” said Joel Kan, MBA’s associate vice president of economic and industry forecasting. “Furthermore, housing inventory shortages have pushed national home prices considerably higher on an annual basis.”Real estate agents continue to report robust buyer demand in markets across the country, but with so little supply at the entry level, sales will likely suffer in coming months.Mortgage rates continue to be stubborn, sitting near record lows even on days when bond yields, which they loosely follow, increase. This gives buyers more purchasing power, but as home price gains accelerate, that power is weakening.