The strength of the UK housing market has surprised the Council of Mortgage Lenders. The CML is a trade association for the residential mortgage lending industry in the UK. Analysts there reported that recovering house prices reflect low volumes of new-build properties, a drop in willing sellers and a high level of cash and overseas buyers. But it’s not certain that the good signs would be around in 2010. CML analysts reported that their initial forecast for 2009 was far too pessimistic. Low mortgage rates in the UK have kept fewer households from falling behind on their mortgages. Rising unemployment will mean that more borrowers will fall behind, but the lower rates, the analysts anticipate, will off set the increase. Foreclosure levels have dropped below what the analysts earlier feared, and analysts have cut their foreclosure forecast to 48,000 for 2009 from the anticipated 75,000 prediction from last year. But that doesn’t mean foreclosures are not on the rise. CML analysts predict that foreclosures will increase from 48,000 in 2009 to 53,000 in 2010. The analysts forecasts that those behind by more than 2.5% or more of their mortgage will reach 195,000 at the end of the year and creep up to 205,000 by the end of 2010. CML also found that gross lending in the buy-to-let mortgage market – where investors buy a property to resell at a profit – increase 10% to £2.1bn ($3.4bn) in Q309. It’s the first increase in two years, but the recovery in buy-to-let lending is climbing from the basement. Even with the increase, current lending volumes are still significantly lower the peak in 2007, according to CML. “At this stage, the recovery is modest - but the figures show that buy-to-let is here to stay. Buy-to-let lenders are among those facing some of the biggest challenges in raising mortgage funding, so the improved figures are all the more welcome,” said Michael Coogan, director general of CML. <strong>Write to</strong> <a href="" target="_blank">Jon Prior</a>.