It's not the refraction, it's just that without a lens the light goes through at different angles without a collimator. Different angles equate to rings of fringes that aren't real, a result of the long path length in water. I had to learn this lesson the hard way so I want to be sure others avoid this mistake.
If you have a flat that you know is pretty good try the water test without a lens and you'll see many rings of power to demonstrate this effect. Up close many rings, fewer when you are farther away.
But you got fringes so you've mastered the hard part of this test.