Mortgage applications surprisingly tumbled last week despite relatively flat interest rates, with a widely-watched composite index of application activity falling 28.7 percent this week on a seasonally-adjusted basis. The Mortgage Bankers Association’s Market Composite Index fell to 688.3 for the week ended March 28, down from 965.9 one week earlier, according to a statement released Wednesday morning by the group. Applications were 4.8 percent higher relative to year-ago activity. The application index is calibrated to March 16, 1990; a reading of 688.3 means that application activity was roughly 6.8 times greater than when the index was first established. Borrowers looked to refinance at a much slower pace this week relative to one week earlier, the MBA said, with refinance applications dropping 38.1 percent; purchase applications fell 11.8 percent, as well. Refinancing activity is largely driven by prevailing mortgage rates, which the MBA said were relatively flat during the past week; national rate surveys from both Freddie Mac and Bankrate.com are released tomorrow. Borrowers had applied to refinance in droves last week, with the refinancing index increasing more than 82 percent. “There was sort of a backlog of borrowers just waiting to refinance after the wild rate ride we’ve been on,” said one broker that Housing Wire spoke to. “Now that rates are steady, and that backlog has been cleared, we’re not seeing as huge a surge in refinancing interest from borrowers.” FHA applications — which have surged in recent weeks as well, thanks to efforts to revitalize the program — also posted their first weekly decline in over one month, falling 15.1 percent. The refinance share of mortgage activity decreased to 53.4 percent of total applications from 62.0 percent the previous week, the MBA said. For more information, visit http://www.mortgagebankers.org.

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