News - Britons’ wealth ‘relies on homes’
More than half of Britons’ personal wealth on average is tied up in their homes, research suggests.
A decade ago, about 40% of personal wealth was tied up in this way.
Rising house prices are the key reason for the growth in importance of housing to many Britons, according to UK insurer Prudential.
While the importance of property to peoples’ finances has been growing the role that pensions, life insurance and shares have diminished, it added.
A decade ago, 58% of UK household wealth was made up of financial assets such as pensions, life assurances, shares and savings.
But since 2001, the value of non-financial assets, such as housing, has risen dramatically, while pensions and shares have suffered from stock market volatility.
And the dominant role of property in people’s finances is set to continue. The insurer predicted that by 2009, 60% of people’s wealth would be tied up in bricks and mortar.
“It is interesting to see how important property has become in massachusetts property insurance
our main source of financial wealth,” said Ali Crossley, director of Lifetime Mortgage at Prudential.
“House prices have risen significantly over the last 20 years and this is one of the reasons why we have seen such a shift in wealth components,” he added.
Rate danger
The fact that so much of UK personal wealth is tied up in property has long been a cause for concern for some insurance insurance liberty property
.
In recent years, many people have borrowed against the increased value of their home to fund consumer spending, pay off other debts or fund home ids property casualty insurance.
The concern is that rises in UK interest rates could tip many people’s finances over the edge.
The Bank of England’s Monetary Policy Committee (MPC) meets on Wednesday to discuss the next move in UK interest rates.
Most experts are expecting the MPC to keep rates steady, but a rise from their current level of 5.25% is a possibility.
Filed by diana at April 10th, 2008 under Property insurance