Nearly two thirds of homeowners in a study of English mortgage holders store almost all their savings in one single asset – their own home – new academic research from Durham University suggests.

The study highlights the danger that millions of families face should the value of the housing market drop or experience a crash similar to that of the late 1980s.

Ironically the initial findings of the two year Banking on Housing; Spending the Home project highlights that just under a third of mortgage holders do not even think of, or use, their owned homes as a means of storing or accumulating wealth, despite the fact that almost two thirds of these homeowners have no other savings investments apart from their home and pension.

"This study really draws attention to the precarious position of the majority of English homeowners' savings," said Professor Susan Smith. "While many would think it strange to invest everything they have into one particular company, to all intents and purposes more than seven million people in England are doing just this."

Professor Susan Smith added: “We found that most people understood and made good use of their mortgages to free up housing wealth to spend on other things. Most people agree that home equity should not be spent rashly but almost everyone we spoke to views their home as a financial buffer or safety net that they can cash in on if times get tough.”

“If the housing market did downturn and these safety nets disappeared the political, economic and social impact could be devastating.”

The academics believe there are several policy implications that will arise out of this project including the potential need for guidelines on how much to reinvest into housing to safeguard the future value and quality of the housing stock.

There is also the question of what, if people are using housing wealth as a safety net now, they will turn to in the future; and the issue of how best to manage, or hedge, the risks of having all your eggs in a single housing basket.