In the first quarter of this year the number of over-55s turning to equity release products increased year on year but they took less cash out on average than previously.

Compared to Q1 2019, plan sales rose 6% (from 11,190 to 11,881) while the amount released fell by 3.8% (from £839.6m to £805.2m), according to a new Market Monitor report from equity release adviser Key.

There was a 9% dip in the average loan amount to £67,769.

In Q1 2020 there was a focus on financial management, with 8% of customers re-broking existing plans to take advantage of low rates and repaying debt.

These changes were in part fuelled by the increase in the sales of drawdown plans (72% in Q1 2020 vs. 66% in Q1 2019). The total of reserved drawdown rose from £349.1m in Q1 2019 to just over £390m, leaving the market value almost unchanged at £1.2 billion. 

Plan sales rose in seven of the 12 UK regions with Northern Ireland seeing the biggest increase (48%) followed by the North West (31%) and the North East (28%).

Some 37% of all equity released was used to repay debt on mortgages (65%), credit cards (16%) and loans (11%). The average residential mortgage repaid using equity release was over £51,000.

Some 21% of equity released was used for gifting with 8% being spent on holidays and 17% on age proofing customers’ homes or gardens.

The average age for those releasing equity remained stable at 71.

Will Hale, chief executive at Key, said: “Our new analysis of the driving force behind equity release decisions suggest that this is a multi-use product driven often by need rather than aspiration with substantially more of the proceeds being spent on debt repayment and helping family members than holidays.”