U.S. mortgage applications increased by 12.8 percent in the week ending Dec. 2, compared to the previous week, as refinance activity increased, according to the Mortgage Bankers Association (MBA).

Refinances increased by 15.3 percent, compared to the previous week. Refinances made up 76 percent of all applications, up from 73.9 percent in the previous week.

Coming out of the Thanksgiving holiday, applications increased significantly as mortgage rates dropped to their lowest levels in about two months,” said Michael Fratantoni, MBA's vice president of research and economics, in a statement.

“In particular, refinance applications increased sharply, with some lenders seeing refinance volume double. Despite this surge, aggregate refinance activity is still below levels reported two weeks ago.

The four-week moving average for mortgage applications was down 3.2 percent.

In November, 85.5 percent of mortgages that funded home purchases were fixed-rate 30-year loans. Only 6.8 percent were 15-year fixed-rate loans and 5.9 percent were adjustable-rate mortgages (ARMs), the lowest level since January.

For refinances in Novermber, 52.9 percent of applications were for fixed-rate 30-year loans, 26.2 percent for 15-year fixed-rate loans and 5.8 percent for ARMs.

The average interest rate for 30-year fixed-rate mortgages of $417,500 or less was down to 4.18 percent from 4.21 percent. The average interest rate for 30-year fixed-rate mortgages greater than $417,500 was down to 4.52 percent from 4.55 percent.

The average interest rate for 15-year fixed-rate mortgages was down to 3.53 percent from 3.58 percent.

Overall interest rates are around 4 percent, according to Freddie Mac.