When you want to borrow money from a bank, say $10,000, then the bank wants to make sure you have at least something of that value in your possession, so if you can't pay the money, they take what you have. Technically, if you won a house worth half a million, then the bank will lend you half a million. You borrow against your house. Now houses have market prices, but sometimes you cannot get the price you want. If your house is valued at half a million, but you can only sell fro $450,000, then your house price is "inflated". Many individuals have been borrowing against inflated house prices in the last few years.