After dropping off a cliff during the past two weeks, mortgage applications rebounded last week, according to data released Wednesday morning by the Mortgage Bankers Association. The MBA’s composite index of overall application activity rose 3.0 percent to 684.9 for the week ending February 29, the result of moderate increases in both purchase and refinance application volume. The application index is calibrated to March 16, 1990; a reading of 684.9 means that application activity was roughly 6.8 times greater than when the index was first established. Prior to this week’s rise, the index had fallen nearly 40 percent in two weeks’ time, reflecting the bond market’s increasing concern with inflation. For this week, the MBA said that refinancing activity rose 4.5 percent, while purchase applications rose 1.4 percent on a seasonally-adjusted basis. Conventional and government applications also rose moderately. ARM share jumped as well, with adjustable-rate mortgages reaching 17.3 percent of total application volume, up from 15 percent one week earlier. Part of the reason applications did better in the past week is a likely drop in key mortgage rates. While both Freddie Mac and Bankrate.com’s well-known rate reports won’t be available until tomorrow, the MBA reported Wednesday that rates on 30-year fixed-rate mortgages fell to an average of 5.98 percent — a drop of 29 basis points in one week. For more information, visit http://www.mortgagebankers.org.