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project findings | PROJECT OUTLINE |

Banking on Housing; Spending the Home

Britons hold more wealth in their homes than ever before, and are spending more freely from these assets now than they are ever likely to again. Banking on Housing is concerned with when, where, why and how, people choose and use their mortgages to roll equity out of housing and into other things. The researchers worked in depth with a cross section of 150 British mortgage holders to explore the role of housing wealth as a driver of consumption.    

This project ran from December 2004 to February 2007

image illustrating findings

click to view the findings summary sheet for this project>>

Project team
Susan Smith award holder
Beverley Searle
Nicole Cook

Prof. Susan Smith
University of Durham
Department of Geography
South Road
Durham, DH1 3LE
United Kingdom

0191 334 1946

Publications include

Smith S. J., Cook N. and Searle B. A. ‘From Canny Consumer to Care-Full Citizen: Towards a Nation of Home Stewardship’, Cultures of Consumption Working Paper No.35 at: publications.html. (forthcoming).

Smith S. J. and Searle B. A. ‘Dematerialising Money: Observations on the Flow of Wealth from Housing to Other Things’, Housing Studies (forthcoming).

Searle B. A., Smith S. J. and Cook N. ‘From Housing Wealth to Well-Being?’ (forthcoming).  


Project outline


Most British households hold most of their wealth (as well as the majority of their debt) in owner-occupied homes. There is, moreover, an expanding range of financial products explicitly designed to make this wealth available; to allow equity withdrawal in situ and across the life course. This project aims to document the ebb and flow of housing equity between domestic property, on the one hand, and other goods and services, on the other. It is concerned with the meaning, significance and use of housing wealth in consumption.

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Over two-thirds of British households own or are buying their home. This is probably their biggest – possibly their only - major financial investment. Such investments bring reasonable returns over the long term, and in the last five years house price appreciation has more than doubled the value of the stock. At the same time low interest rates and unprecedented financial product innovation have made it cheap and easy to extract housing wealth and to spend it on other things.

Enhanced access to an appreciating store of housing wealth has important implications for the economy, for households’ indebtedness and for the sustainability of owner occupation. Yet, surprisingly little is known about people’s attitudes to, and use of, this resource. What research there is concentrates primarily on the release of housing wealth in older age. It is less concerned with a suite of financial products enabling equity withdrawal across the life course. This project shifts the balance. It is about the way people of working age regard and use their housing wealth. It examines the consumption of a key financial service (mortgages) in order to turn a fixed asset (housing) easily and routinely into cash. And it documents what consumers do with the funds they release.

The study is concerned with the extent to which equity is reinvested into the housing stock or directed into other areas of consumption. It considers the relevance of housing wealth to households’ wider strategies for managing savings, spending and debt. It charts the risks associated with equity withdrawal, and it explores the social and personal gains to be made from enhancing this capability. It also engages consumers, as well as other actors, in debates over whether lenders, governments, or other communities of interest could or should regulate the way such wealth is used.

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1. Where does housing wealth feature in homebuyers’ conceptions and management of spending, savings and debt?

It is hard to overstate the magnitude of shift in the extent and availability of housing wealth in Britain. In less than 100 years, a nation of renters has become a society of home owner/buyers. In half a century there have been four major phases of rapid house price appreciation. less than 25 years, mortgage lenders, whose concern was once with product rationing, have found themselves vigorously marketting loans in an intensely competitive environment. In less than a decade there has been a frenzy of product innovation allowing borrowers unprecedented access to housing wealth in a context where spend against secured loans does not have to be accounted for. The result is that, in Britain, more people have more wealth in their housing than ever before. And with mortgage finance as an increasingly permeable interface, this wealth is probably more available now than it will ever be again.

To what extent do people regard their homes as a financial asset? Have they built up their housing wealth deliberately as part of an investment strategy, or do they regard it as a windfall from house price appreciation; is it regarded expendable over a life time, or should it be conserved for the next generation; is it kept separate, to be spent on something special, or rolled seamlessly into households’ more general accounts? And to the extent that housing is regarded as an investment, how do people handle this? Where does the management of housing assets feature relative to other housing and non-housing demands on people’s time and money? The answers to these questions have a bearing on the homes people buy (whether they prize use value or investment potential), whether they borrow against property (or turn to credit cards/ unsecured loans), what financial products they select, what housing wealth they spend, and what they spend it on.

2. What motivations, beliefs and behaviours are associated with the consumption of those financial services which enable home equity withdrawal?

Housing wealth is no longer a fixed asset; it is mobile in all kinds of ways. It can, for no more than the price of a phone call, or a visit to the cash machine, be spent on something as large as a new car or as small as a swimsuit. With secured loans being so much cheaper than others, borrowing against the home has become an easy, obvious and cost-effective option for owner-occupiers sourcing all kinds of spending. The economic significance of this is considerable. If the public released this wealth into the economy (mortgaging, say, to the maximum sustainable by property values and regular incomes) it could transform the high street, yet drain resources from the housing stock and expose borrowers to financial risk. If, on the other hand, people single-mindedly paid off their loans, consumer spending could slump, high streets would cease to thrive and taxable savings might dwindle away. This is a fine balance, yet the circumstances, beliefs and behaviours which tip it one direction or another are poorly understood.

A second key set of questions therefore addresses the way households make equity withdrawal decisions. To what extent does people’s changing relationship with their housing wealth affect their demand for different kinds of mortgages and financial advice? In what ways do different mortgage products, and related financial services, constrain or enable different kinds of equity withdrawal decision? How do people adjust their management and use of housing wealth to changes in the economy? Casting light on this will feed into debates on financial literacy and risk assessment. It will help establish what people want and need (in terms of information, product features, other financial services) in order to make the safest and most effective use of their housing wealth both now, and as their household finances and the wider economy changes.

3. What happens to the equity that flows out of housing and into other spheres of consumption?

While households now have access to accumulating housing wealth across their entire life course, governments are increasingly looking to suchwealth to cover later-life costs including pensions gaps and care needs. Meanwhile the quality, condition, maintenance and repair of the national stock of housing is also at issue. This raises some important questions concerning the rate and direction of flow of housing equity out of housing and into other things. How does access to housing wealth interact with practices and strategies for managing risk? Do people use housing equity to buy insurance-based protection products or do they store as much wealth as they can in their property to act as a ‘home-made’ safety net? How freely does housing wealth materialise in different styles of consumer goods; and are domestic capital gains used to speculate on other things? Finally, to what extent, and with how much success, do people look to their housing equity to add ‘human capital’, meaning and comfort to their lives?

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The majority of research on home equity withdrawal is survey-based and concentrates primarily on the extent to which housing wealth is (or is not) released into the economy or re-invested into homes. This however, it casts relatively light on the decisions and practices which account for the way housing wealth is used. To address this, the current project favours qualitative methodologies. It includes:

i) A systematic review of existing qualitative and quantitative evidence around mortgage equity withdrawal and release.

ii) A qualitative survey of mortgage holders across a range of household types and income groups. This addresses mortgage choice and use, and casts light on the household negotiations and trade-offs involved in spending and savings decisions around housing wealth.

iii) A series of household case studies documenting the flow of housing equity into a range of other things. ‘Time grids’ are used to locate equity withdrawal decisions in relation to changes in the economy, the locality and the household. ‘Space grids’ are used to track the flow of housing wealth within and beyond the material environments of home, neighbourhood and region.

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The findings will help identify the information and servicing needs of consumers as they take increasing responsibility for their own long-term financial planning. It will also contribute to an understanding of the public’s financial capabilities in the context of major reforms to financial services in Britain. The study will provide new information about the selection, use and management of mortgages at a time when the government is reviewing the future of the UK mortgage market. The research will also inform theoretical debates on consumption, charts the moral economy of (housing) markets, and provides a materialist – even postsocial – account of the meaning, significance and use of housing wealth.


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