How US pioneered the long stretch

When it comes to stretching the length of a mortgage, Britain - as with so many things - seems to be following in America's footsteps.

Just over two years ago, with the US in the grip of one of its biggest ever real estate booms, the huge, government-sponsored mortgage finance company Fannie Mae started trialling 40-year mortgages as a way of helping more Americans get on to the property ladder.

The company was keen to gauge public reaction to the idea of a four-decade home loan as part of its efforts to make home ownership more affordable for the less well-off. It was suggested that such deals could prove particularly beneficial for black and Hispanic consumers.

The pilot scheme was judged a success and a year ago Fannie Mae started rolling out the loans nationwide. Borrowers can choose between a 40-year fixed-rate deal or a range of variable rate loans that are fixed for the first few years.

"With a 40-year term mortgage, you get lower, more affordable monthly payments, making it easier for you to achieve the dream of home-ownership," enthuses Fannie Mae. "This product may be right for you if you are a first-time or trade-up borrower living in an area where high home prices and affordability are issues."

Only in the small print does the company state that "you will pay more total interest over the life of a 40-year loan versus a 30-year loan..." And the interest rates on the 40-year deals are usually slightly higher than on standard deals.

Amazingly, it seems that age is no barrier to taking out one of these mortgages. At the time of its introduction, the Chicago Tribune newspaper reported on how Jim Erbach signed up for one of the loans ... at the age of 73. He wasn't worried about the length of the mortgage, which cut his monthly payments by nearly $200 (£108), because he was planning to sell his apartment in five to 10 years' time. "I certainly don't expect to live for 40 more years," he said, laughing.

But some US debt organisations don't think there is anything funny about what they see as yet another way for finance companies to keep Americans mired in debt. They reckon that for a borrower to consider a 40-year mortgage because of the small difference in monthly payments may well be a sign that he or she is getting in over their head.

Nevertheless, these 40-year deals have taken off in the priciest areas - the MortgageNewsDaily.com website recently reported that they made up 25% of all new home loans in California.

Perhaps inevitably, in March this year a California-based mortgage company called Statewide Bancorp launched what was quickly dubbed the "half-century home loan" and "the Methuselah of mortgages" - a 50-year mortgage.

The company says it is designed to keep payments "manageable" and adds that the response from borrowers has been "overwhelming".