Covid-19 has brought about a change in how customers are using the equity released from their homes, according to new analysis by Canada Life.

The provider analysed its customer data for last year and found that, perhaps unsurprisingly, equity has been used less to fund new cars or holidays and more for buying a new home or making home improvements.

Using equity release to cover essential spending remains the most popular reason for many throughout 2020. 45% of Canada Life’s loans were used to pay off the mortgage, 24% on consolidating existing debts and 18% on funding day-to-day living.

Canada Life saw a noticeable rise among customers using equity release to buy a new property 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, it was more than double in Q3 to 16% of loans and increased further in Q4 to 18% of applications.

In 2020, 40% of customers used equity release to fund home improvements.

Alice Watson, head of marketing, insurance at Canada Life, said: “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. For example the boom in new property purchases is likely to have been fuelled by the stamp duty holiday announced in the summer Budget.

“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. The world will continue changing but people will always want to feel in control of their retirement and use their overall wealth to secure the financial futures they aspire to have. This is where advisers, with a holistic view of the retirement market, can help their clients plan for and achieve that future.”