The first three months of lockdown resulted in early signs of changes in behaviour among equity release customers between Q1 and Q2 2020, according to analysis by Canada Life.
There was a 5% drop in requests for lifetime mortgages to pay for a holiday when compared to the first three months of the year, while requests for loans to support day-to-day living grew by 5%, to account for 22% of equity release applications in Q2.
Releasing equity to gift to family or friends, or to help family get on the property ladder, have both seen slight increases in Q2 by 3% (to 18%) and 1% (to 4%) respectively.
The percentage of requests being made to clear existing mortgages has dropped by 10% in the last three months when compared to the first quarter of the year.
This may be down to people opting to take a mortgage payment holiday instead of clearing the outstanding balance in full.
Funding home improvements has continued to be the most popular reason to take out a lifetime mortgage, accounting for two-fifths (39%) of all requests over the six month period, with just a 1% increase between Q1 and Q2.
Requests to fund home adaptations, to make a home safer or more comfortable have also increased by 2% to account for 9% of applications in the last three months.
Alice Watson (pictured), head of marketing, insurance at Canada Life, said: “With coronavirus transforming the world in a matter of months and turning many lives upside-down, it’s unsurprising that many are looking to release equity for different reasons than before.
“Over the last six months and in Q2 especially we can see that equity release has been used less as a means to fund the ‘once in a lifetime’ experiences and more as a way to support family members or day-to-day living expenses.
“As we enter in to a period of increased economic insecurity I wouldn’t be surprised if this shift became more pronounced.
“As lockdown measures start to lift it will be interesting to see what effect this has on consumer behaviour.
“The full impact of coronavirus is still unknown, but the global pandemic has proved that the industry can rise to any challenge.
“Over the last few months alone, the market has demonstrated its resilience by adjusting to new ways of working and embracing technology and I’m confident that the market will continue to pull together to deliver solutions for advisers and their clients.”