By Rebecca O’Connor

Homeowners will be paying off their mortgages long into retirement if they take up the latest offer designed to beat rising house prices — loans with a 52-year term.

With the Bank of England expected to increase interest rates today, consumer groups gave warning that overstretched borrowers could lose their homes if they failed to keep up repayments.

Among the one third of lenders prepared to sell mortgages lasting for 40 years or more, the supermarket chain Tesco allows some customers 52 years to pay off one of its home loans.

According to MoneyExpert.com, a financial website that collated the research, first-time buyers are one of the groups most likely to be targeted by lenders seeking to extend mortgage terms.

Keith Tondeur, of Credit Action, a debt advice group, said: “Lenders are coming up with more ingenious ways to sustain a house price boom that is not sustainable. The only way to afford property now is to be saddled with debt for life. But if something goes wrong, such as a rise in interest rates or a fall in house prices, then these moves could prove catastrophic.”

Longer repayment terms offer fresh evidence that mortgage lenders are bending the traditional rules of lending as house prices rise ever higher. Figures released yesterday by the Land Registry showed that house prices rose by 9 per cent in the past year.

Abbey, the second biggest mortgage lender, has increased the amount that it is willing to lend couples to five times joint income, up from 3.5 times. Advantage, the mortgage lending arm of Morgan Stanley, will lend up to seven times the borrowers’ income.

Citizens Advice this week reported a rapid increase in inquiries from homeowners struggling with mortgage debt. David Harker, its chief executive, said: “We are particularly concerned by the sharp rise in inquiries from people getting behind with mortgage payments at a time when court action that can lead to repossession is on the increase.”

Homeowners are tempted by longer mortgage terms because monthly repayments are lower. However, they have to pay tens of thousands of pounds in extra interest.

Sean Gardner, the chief executive of MoneyExpert.com, said: “The old model of three times salary and a mortgage lasting twenty-five years maximum is on the way out, but nobody should have a mortgage to pay when they are no longer working and do not have the income to meet repayments.”

First Direct, part of HSBC, Britain’s biggest bank, offers mortgages which last for 47 years. HSBC and Alliance & Leicester offer 40-year loans.

Nick Gardner, of Chase De Vere mortgage management, said: “Longer terms are a false economy. The monthly savings are relatively small but result in vast sums of extra interest. The message to borrowers is, ‘Don’t do it’.”

Most lenders usually require borrowers to pay off their mortgage before they are between 65 and 75. But age limits are also creeping up. Yesterday, Advantage removed the maximum age limit from mortgages aimed at borrowers with poor credit histories to allow those over 65 to take out loans.

Tesco has yet to offer anyone the 52-year mortgage.