If you thought the bubble-nomics of America's housing market were hard to watch, you may want to avert your gaze from the U.K. Apparently, buyers are so desperate for "affordability" that the banks have had to invent the mother of all real estate loans, the 125-percenter. (Thanks to the Housing Panic Blog for putting this on my radar.)

You got it -- banks in the U.K. are now offering to lend people 125% of the value of a home. How crazy are things when banks and real estate brokers are hawking products to people who can't afford the fees on the transaction, let alone the home itself?

Given the insane rise in U.K. real estate already on the books, Alliance & Leicester PLC (Pink Sheets: AANCF.PK) immediately landed on my "short this!" watch list. The bank is looking to maintain its growth reputation by embarking on ever-riskier lending schemes, like a "buy-to-let" and "self certification" partnership with Lehman Brothers (NYSE:LEH). I wonder just what the odds are that it someday pulls an Impac Mortgage Holdings (NYSE:IMH), or an Accredited Home Lenders (NYSE:LEND), if not a New Century.

Given that this is a deposit-taking bank, the same kind of meltdown looks unlikely. And this is only the latest bank to join the fun. Predecessors include Northern Rock (Pink Sheets: NHRKF.PK), and BM Solutions.

This kind of stretch to get into nutty lending ought to make anyone wonder just how long the good times will roll in the U.K. What goes up eventually comes down. You'd think a market with as long a financial memory as London's would remember that.

Comments? Bring them here.

Seth is a member of the Motley Fool Global Gains team, which scours the world for the best investment opportunities. A free trial will show you what they're watching. (Hint: It doesn't include banks that offer 125% loans.)

At the time of publication, Seth Jayson had no positions in any company mentioned here. See his latest blog commentary here. View his stock holdings and Fool profile here. Fool rules are here.