WASHINGTON - Mortgage applications surged last week, coming mostly from borrowers looking to refinance at sharply lower rates after the Federal Reserve unveiled plans to buy Treasury bonds and mortgage-backed securities.

The Mortgage Bankers Association said Wednesday that its weekly application index climbed 32.2 percent for the week ended March 20. The index reached 1159.4, up from 876.9 a week earlier.

On an unadjusted basis, the index rose 31.4 percent compared with the previous week, the trade group said.

About 78.5 percent of applications came from borrowers seeking to refinance home loans at lower rates, rather than purchase homes. The refinance rate was up from 72.9 percent in the prior week, the bankers association said.

Refinance volume jumped 41.5 percent while purchase volume edged up 4.2 percent.

The trade group's application index remains below its peak of 1,856.7, reached in May 2003 at the height of the housing boom. The survey provides a snapshot of mortgage lending activity involving mortgage bankers, commercial banks and thrifts. It covers about half of all new residential mortgage loans made each week.

An index value of 100 is equal to the application volume on March 16, 1990, the first week the association tracked application volume.

Interest rates have plunged since the Federal Reserve said in November that it would buy up to $500 billion in mortgage-backed securities in an effort to bolster the long-suffering housing market.

Last week, the Fed went further, announcing a $1.2 trillion effort to lower rates on mortgages and other consumer debt in a bid to revive the economy. The effort includes buying up to $300 billion in long-term government bonds and $750 billion in mortgage-backed securities guaranteed by Fannie Made and Freddie Mac.

The average rate for traditional 30-year fixed-rate mortgages dipped last week to 4.63 percent from 4.89 percent a week earlier, according to the Mortgage Bankers Association.

The average rate for 15-year fixed-rate mortgages slipped to 4.48 percent from 4.52 percent a week earlier, while the average rate for one-year adjustable-rate mortgages rose to 6.22 percent from 6.20 percent.