A simple model is to assume a two thirds take-home out of a £24K average wage (16K net) has on average half available to be spent on a mortgage. At 2% rates and 8K available that opens up a interest only repayment mortgage of £400K home value in the average case.
If interest rates rise to 4% the same 8K of available funds buys a £200K mortgage/home value. i.e. home values, stocks and long dated bonds might all halve in price if/when interest rates rise from 2% to 4%. You can enter similar figures into a
bond price calculator i.e. 2% coupon, 100 year (indefinite) term, 4% yield and see the 50% lower price,
Home + imputed rent = stock + dividends ... which in turn is similar to long dated bonds (some stocks are more bond-like than some bonds). Each of stocks/bonds/property prices are reflective of interest rates.
Cash, even earning nothing could see its purchase power of stocks, property and/or bonds rise substantially and relatively quickly. If £100 in cash ends the year at £100 but home/stock/bond values had halved then that cash has doubled its purchase power of stock/property/bonds. All stock down from 100 to 50, 50/50 stock/cash down to 75, stock/cash worth 50% more than all stock, and all stock would require to earn (or have earned) 2%/year annualised more than 50/50 stock/cash in order to close that gap over a 20 year period. Which is the typical figure we see in practice, all stock having earned 6% real, 50/50 earned 4% real for instance since the 1980's across a period of broadly declining interest rates from very high to very low levels.
Back in the 1970's Robert Lichello devised a investment method he called "AIM" that in effect scales cash levels up and down, can at times be all-in (low/no cash), at other times might be 80% in cash. A rule driven 'Automatic Investment Method'. Buffett is up to over 30% cash nowadays, which for him is a lot, AIM I suspect at such low current yields would be significantly more into cash. Low/no inflation and hard cash stuffed under a mattress can be reasonable, if/when interest rates rise that could either then be deposited to pay a more decent interest rate, or be deployed to buy property/stocks/bonds in perhaps having seen its purchase power of those assets having doubled or maybe more.
But high, or low interest rates can persist ... maybe for decades. So what many opt for is a simple 50/50 choice. Compared to equity heavy 50/50 will lag over some periods, decline less over other periods, broadly do OK and be more consistent across time.
A retiree living in a 500K home with another 500K invested in a stock portfolio that is generating 4% dividends, 20K/year, may feel themselves to be a comfortable millionaire. But if/when mortgage interest rates rise to 4% from 2% levels and both their stocks and home values had halved, even though the portfolio may be paying 6% dividend, 250K home value, 250K stock value paying 6% is down 5K on income production, a 25% haircut ... perhaps at a time when inflation is also modest (so even lower in real terms). In contrast another who lived in a 250K home, had 250K in stock and 500K in cash might see their net wealth having dropped from 1M down to 750K. We're in a era where very low interest rates is having many with very high levels of cash reserves and where even accepting a small regular loss in real terms on that cash is seen as being acceptable given the potentially significant risk in other assets as/when interest rates/inflation rises.