Mortgage applications tanked last week as the nation's financial markets were thrown into chaos, according to a weekly survey released Wednesday by the Mortgage Bankers Association. For the week ended Oct. 26, the MBA reported that application volume fell a whopping 23.4 percent on a seasonally-adjusted basis over the previous week; applications were 28.4 percent off from year-ago levels. Driving borrowers away from the mortgage market? It wasn't mortgage rates, which held relatively constant according to the MBA data. Instead, historic upheaval in the nation's mortgage markets likely kept borrowers out of the market as economic uncertainty ruled the day ahead of a bailout proposal that has yet to gain Congressional approval. Refinancing activity comprised 51.6 percent of activity in the prior week, but dropped to just 44.0 percent of total applications in the reported week; purchase application activity now dominates the mortgage market. FHA and other government mortgage applications also fell by 14.1 percent, the MBA said. A separate application index, maintained by Mortgage Maxx LLC and used by prepayment researchers, also suggested that applications fell, but not nearly as sharply. The company's MAX index found that applications fell a comparatively more muted 5.8 percent for the same week; as HW reported on last week (see For Mortgage Applications, Which Way is Up?, Sept. 24), sources have suggested that this trend might suggest that frustrated borrowers are increasingly choosing not to shop around for a mortgage. According to MAX, application activity in California fell just 3.4 percent from the previous week, meaning that the Golden State may have fared comparatively better than other locales. But Mortgage Maxx publisher Paul Descloux suggested that REO sales are contributing to a "rather robust year-over-year pace of home sales in California" -- a sentiment backed up by most real estate data sources in recent weeks. Such sales, while a positive for mortgage demand overall, may end up meaning less in terms of extrapolation to the overall health of the housing market in affected areas. "As the credit markets continue to stress, mortgage applications continue to fade to anomalous levels," Descloux said. "Shell-shocked consumers may just want to call it a year and stay under the covers." With the historically slow holiday season quickly approaching, his advice might as well extend to many in the mortgage markets, too. For more information, visit and Kelly Curran, Diana Golobay, and Paul Jackson contributed to this report.