Sales of equity release plans dropped 27% from the first quarter of 2020 to the second quarter and the total value of equity released fell by 45% as lockdown took effect, according to a new report.

Older homeowners released £1.42bn of property wealth in the first half of 2020 as cautious customers cut back and advisers and lenders faced delays from lockdown restrictions, Key’s Equity Release Market Monitor said.

The number of plans taken out in the first half of 2020 was 10% lower than the same period last year.

Property wealth released dropped 12.6% to £1.47bn.

A quarter (24%) of funds released were used to repay mortgages. Around one fifth (21%) of money released was spent on gifts for family members.

Across the six months nearly three-quarters (72%) of plans taken out were drawdown in comparison to 28% which were lump sum mortgages.

Will Hale, CEO at Key, said: “The unprecedented circumstances the UK and the world finds itself in due to the coronavirus has been reflected in the significant slowdown in the equity release market in the second quarter. Whilst the sector has been remarkably resilient in adjusting working practices in the face of lockdown to ensure we can continue to help customers, there are a number of knock-on effects from the current pandemic.

“Our focus has been on supporting customers who have specific needs rather than unmet desires.  With people unable to go on holiday or spend money on age proofing their home, the responsible approach has been to advise them to wait until the market returns to more normal trading conditions and they could make sustainable long-term decisions.”