We've been keeping a close on employment numbers since the 2009 recession. Many times in these pages we've noted that as job growth goes, so goes the economy... and, of course, so goes housing.

Job growth is finally going the way we want. The economy added 217,000 new jobs in May, with the private sector by far leading the increase, adding 216,000 new jobs. The gains in May come on top the 282,000 new jobs in April and the 203,000 in March.

This is good news, because we haven't seen monthly job growth continually exceed 200,000 each month until recently. To sustain a recovery, the economy needs to add 200,000-or-more jobs each month. With the recent gains, total employment is now 98,000 above the pre-recession peak and at an all-time high. (Though it's worth noting that the population continues to grow as well: 10 years ago there 290 million of us; today there are 317 million).

Interestedly, another month of strong job growth hasn't had much impact on mortgage rates. Rates moved up this past week, but only slightly. Looking at the national averages, Bankrate.com's survey shows the 30-year fixed-rate mortgage averaged 4.34%, which is two basis points higher than the previous week. Freddie Mac's survey shows the 30-year loan averaged 4.20%, a six-basis-point increase. Rates are still very reasonable.

More borrowers took advantage of low mortgages last week. The Mortgage Bankers Association (MBA) reports that application activity for the week ending June 6 was up strongly. Week over week, refinances were up 11%, while purchase applications were up 9%. This is one of the strongest weekly gains in months.

Our enthusiasm is somewhat tempered, though. Too many times we've seen purchase applications string together two or three weeks of gains only to reverse course. But with institutional buyers (the cash buyers) pulling back, we are cautiously optimistic the individual buyer – using mortgage financing – will pick up the slack. Recent job growth is behind our optimism.

Given recent job data, we wouldn't be surprised to see mortgage-purchase activity trend higher. More people working is obviously a plus. At the same time, mortgage credit continues to avail itself to more people. The MBA, which produces the Mortgage Credit Availability Index (MCAI), reports that the MCAI rose in May to 115.1, from 113.8 in April. So, yes, underwriting standards are easing, and actually have been easing over the past two years when you consider the MCAI base was 100 when it was introduced in March 2012.

This isn't a surprised. As the economy improves (which it has), lenders become more willing to extend loans, and to extend loans to lower-rated borrowers. This is another positive trend we've seen developing in the past two years, as evinced by the MCAI.

The trends we see in job growth and mortgage lending bode well for housing, which is why we remain bullish on housing.

Courtesy of Jessica Regan.

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