Older homeowners released £3.4 billion in property wealth in 2020, according to Key.

The equity release business said that on an annual basis there was 12.5% decrease in plan sales (40,470 in 2020) and a 4.4% reduction in the amount released.

However, the sector ended the year strongly, with 9,930 people releasing over £1.1 billion in Q4 2020.

What do borrowers use the money for?

A trend towards using equity release to refinance debt and support families through gifting was noted by Key, with 22% of borrowers using the cash to help their wider family.

A large number planned to use the equity released to refinance a mortgage (29%) or unsecured (18%) borrowing.

The average amount released rose by 9.2% from £77,735 (2019) to £84,919 (2020), with LTVs steady at 26%.

Will Hale, CEO at Key, said: “While 2020 is down on 2019, the fact that we have only seen a 4.4% drop in the value of equity released suggests that customer demand remains strong supported by the efforts of advisers, lenders and other service providers in this challenging year.

“Discretionary spending has fallen as equity release increasingly looks to support clients’ aspirations to help their families and make their finances as resilient as possible by refinancing debt. While most people aspire to reach retirement without any mortgage or unsecured debt, this is certainly not possible for everyone and equity release can help to take the pressure off these families while still providing avenues for repayment.”