Interest-free mortgages and savings

A range of related news hits the desk today, from the likelihood that banks will be offering interest-free mortgages, as interest rates hit zero, to the opposite end of the scale where savers will be paying their bank to look after their money in the future.

Savers paying to have their money held by a bank?

Interest-free mortgages?

£50,000 ($75,000) of my deposits guaranteed for repayment within 7 days should a bank fail, regardless of how much I owe the bank?

Are we mad?

Is it getting to the stage that we might as well say:

"No matter what happens, we will ensure that you can gamble and borrow as much as you want for anything ... and then forget about paying it back.  Oh yea, and for you guys who have some cash, give us your money and we promise we will give it you back if the bank screws up."

Is this really the way to go?

In particular, it will cause banks problems as savers put their cash elsewhere.

For example, the rich are sticking their money in gold bars.

With banks already cash-strapped, the last thing they want is all the guys with money, such as pensioners, putting their savings under the bed ... but what's the alternative?

© Private Eye, 2008.