The coronavirus pandemic has resulted in a marked change in how customers are using the equity released from their homes, according to new analysis by Canada Life.
 
The retirement expert suggested that using equity release to cover essential spending still remained the most popular reason for many throughout last year.

However, analysis of its 2020 customer data showed a shift away from using the money to fund new cars or holidays, and a move towards buying a new home or making home improvements.

Almost half of loans (45%) were used to pay off a mortgage, a quarter (24%) on consolidating existing debts and almost a fifth (18%) on funding day-to-day living.
 
Among customers using equity release to buy a new property, Canada Life also reported a dramatic increase in the second half of the year. In Q1 and Q2, this represented a relatively small percentage of customers at 8% and 6% respectively, however, this more than doubled in Q3 to 16% of loans and increased further to 18% of applications in Q4.
 
One of the most popular reasons to release equity in 2020 was to fund home improvements, with two-fifths of customers choosing to release equity for this reason.

“Looking at the reasons why people have chosen to use their property wealth can provide an interesting snapshot into the spending priorities of the nation during the pandemic,” Canada Life head of marketing, insurance, Alice Watson, commented.

“It is largely unsurprising that 2020, a year dominated by lockdowns and restrictions, has seen a drop in people using equity release to go on holiday. While this decline is expected it will be interesting to see whether the rollout of the coronavirus vaccines will lead to the beginning of a resurgence in travel. The popularity of home improvements is also particularly fitting for the year that many of us stayed home, within our own four walls.

“Over this incredibly volatile year the equity release industry has proven itself to be flexible, with products that can be used to fit a variety of purposes.”

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