UK Homeowners - re-mortgaging to survive?

While public sector borrowing exceeded forecasts to 14.5 Billion Pounds, worse news appears in the mortgage lending figures for June rising to 13.1 Billion Pounds, read here. Against forecasts of an approaching further 20% house price fall and a buying slowdown this is ominous news indeed for the UK Treasury. Artificial extreme distortion of interest rates such as we are now seeing, where savers are financially crucified, can lead to all kinds of strange results. Question: Why are so many loans still being made with no income verification on the applicant and why are interest rates charged not reflecting the real risks both to the future earnings of the applicant given the present looming depression, the coming likely further fall in property prices and the potential default of the lending institution itself? Possible Answer: A political imperative for our present political lightweights perhaps! Likely Cause: They have run out of answers or alternatives!