Beverley A. Searle

Dematerialising Money? Observations on the Flow of Wealth from Housing to Other Things

This paper examines the extent and relevance of mortgage equity withdrawal (MEW) in the UK. MEW has, of late, been of most interest as a mechanism transmitting the wealth effects of housing into whole economies. Its implications for housing and social policy are less well documented. To redress the balance, the paper first offers a critique of data resources, before drawing from five substantial surveys to document the growing significance and changing style of MEW among British home buyers. The analysis focuses particularly on the under-explored question of what secured loans are spent on, identifying a trend away from reinvestment into housing, towards the consumption of other things. The study concludes by arguing that ‘wealth effects’ might usefully be recast as ‘equity leakage’ if the aim is to safeguard the quality of the stock and appreciate the limits to housing wealth as an asset base for welfare.

Rethinking the Risks of Home Ownership

Most debate on home ownership and risk has focused on the management of mortgage debt. But there are other risks for home buyers in settings where housing dominates peoples wealth portfolios: where the investment dimensions of property are at a premium; and where housing wealth is, de facto , an asset base for welfare. This article draws from qualitative research with 150 UK mortgage holders to assess the character, extent and possible mitigation of this wider risk regime. The analysis first explores the value home buyers attach to the financial returns on housing. Next we document the extent to which home equity is earmarked and used as a financial buffer. Finally, reflecting on the merits and limitations of this tactic, we conclude by asking whether – in the interests of housing and social policy, as well as with a view to managing the economy – there is any need, scope or appetite for more actively sharing the financial risks and investment gains of housing systems anchored on owner-occupation.

Mortgage Equity Withdrawal in Australia and Britain: Towards a Wealth-fare State?

Abstract Across the decade to 2007, a combination of house price appreciation and relaxed credit constraints gave a boost to consumption through the mechanism of mortgage equity withdrawal (MEW). Arguably, this kept developed economies buoyant, even through periods of recession. This paper uses panel data on British and Australian homeowners to show that, notwithstanding its macro-economic effects, such borrowing has far-reaching implications for the micro-economy of households. The data indicate that, for the period 2001–2005, equity borrowing was a common tactic. The sums involved were not trivial, were not limited to older cohorts, or the province simply of the rich. In fact, the events and circumstances associated with equity borrowing at the zenith of the last housing cycle were consistent with an insurance, as well as a general consumption, role for MEW. As house prices fall and credit constraints are re-introduced, the options for such borrowing will shrink. Recent financial shocks may, by reducing the availability of a key channel from housing wealth into consumption, prompt a crisis of welfare. They pose challenges for housing and social policy as well as for economic management.

From Housing Wealth to Mortgage Debt: The Emergence of Britain's Asset-Shaped Welfare State

Housing has been unjustifiably neglected in comparative welfare state research. The banking crisis of 2007–08, however, revealed how important housing, especially home ownership and the institutional structures of the mortgage market, has become to welfare state change. Securitisation of mortgages created a new circuit of global capital, while national mortgage markets became the conduit through which home owners were connected to this wave of globally sourced capital. In the UK, equity stored in owner-occupied property became much more fungible because of the very open/liberal mortgage market. As a result home owners began to ‘bank’ on their homes using it not only for consumption but increasingly as a financial safety net, a cushion against adversity and a means for securing access to privately supplied services and supporting their familys welfare needs across the life-course. This welfare state change – a move towards asset-based welfare – was historically and today remains underpinned by the emergence of the UK as a home-owning society.

Motivations for Equity Borrowing: A Welfare-switching Effect

During the early 2000s, mortgage market innovation together with home price appreciation increased the scope for mortgage equity withdrawal. From a macroeconomic perspective, this proved to be an important transmission mechanism for the wealth (particularly collateral) effects of housing. Microeconomic accounts of equity borrowing are less well developed, since standard models of savings and consumption rarely take housing wealth into account. This paper, however, builds on a small but growing literature assigning a precautionary savings role to consumption from housing wealth. The analysis uses panel data sourced from Britain and Australia to model households’ motivations for equity borrowing. Key among these motivations are pressing, uninsurable, ostensibly short-term, spending needs. In these contexts, it is proposed that equity borrowing assumes a welfare-switching role, substituting privately owned housing wealth for collectively funded safety-nets

From housing wealth to well‐being?

The positive health effects of owner-occupation, compared to renting, are well documented. But home ownership is itself heterogeneous, as is the health profile of its incumbents, and this is less well recognised. Drawing from a mixed-methods study, which includes 150 qualitative interviews with a cross-section of UK mortgage holders, this paper examines the health implications of a definitive feature of owned housing: its role as a financial tool. In particular, we ask whether there is anything about the process of accumulating wealth into housing or spending from this resource, that enhances well-being (or that adds to psycho-social stress). This question is timely, coming at the end of a long-wave of house-price appreciation, in a setting where it is easy to borrow from housing wealth, under a policy regime that looks increasingly to owned homes as an asset base for welfare. The answer casts light on whether, in what circumstances, to what extent, and by what mechanism, home ownership - the dominant housing tenure of the English-speaking world - might enhance the well-being of individuals, communities and societies.

Mortgage markets and cultures of consumption

Although consumption studies now dominate large areas of social and cultural research, relatively little attention has been paid to the consumption of financial products and services. However, the consumption of mortgages moved to centre‐stage in the early twenty‐first century, as products that were once tightly rationed were more actively sold, and households were faced with an unprecedented array of borrowing options. Drawing from qualitative telephone interviews with a cross‐section of 150 UK home‐buyers, this paper explores the way households in a credit‐rich setting choose and use their mortgages. We argue that, notwithstanding the risks commonly and rightly associated with the financialization of domestic space, mainstream borrowers are often “at home” with their mortgage: they can generally navigate the mortgage maze and put their mortgage to work.

Well-being : in search of a good life?

Introduction The enigma of well-being Achieving high subjective well-being Advancing the study of subjective well-being Well-being: the state of the art Well-being: a welfare ideal.

Debted Objects: Homemaking in an Era of Mortgage-Enabled Consumption

ABSTRACT This paper assesses the relevance of mortgage-led consumption for the assemblage of home. Drawing on qualitative research completed in the UK, we show how the materials and meanings of owner-occupation are constituted by, and experienced through, the accumulation and deployment of secured debt. This is enabled by a particular financial regime, in which the proceeds of equity borrowing are freed for discretionary expenditure. Homes and their contents thus acquire the status of “debted objects”, and these form an interface between the financial and familial values comprising residential space. By attending to these mortgage-enabled purchases, we expose and evaluate the myriad ways in which equity borrowings animate the assemblage of home, adding value to property, linking domestic space with distant geographies and inspiring the art of dwelling.

Property-based welfare and the search for generational equality

In many countries, the demographic shift towards an ageing population is occurring against a backdrop of welfare state restructuring. The paradigm of asset-based welfare may become increasingly central to these developments as individualised welfare is touted as part of the response to the challenge of funding the care of an ageing population. This article focuses on the framing of housing wealth as a form of asset-based welfare in the UK context. We consider the strengths and weaknesses of housing as a form of asset-based welfare, both in terms of equity between generations and equality within them. We argue that housing market gains have presented many homeowners with significant, and arguably unearned, wealth and that policy-makers could reasonably expect that some of these assets be utilised to meet welfare needs in later life. However, the suitability of asset-based welfare as a panacea to the fiscal costs of an ageing population and welfare state retraction is limited by a number of potential practical and ethical concerns.