Customers are continuing to use equity release to clear existing mortgages while many have also used the additional funds to purchase new property, according to latest analysis from the Canada Life ‘Reasons for loan’ data.

Using equity release to pay off an existing mortgage continues to be the most popular use of funds (46% of loans vs 45% in 2020), followed by making home improvements which add extra value and enjoyment to the property, which accounted for 34% of loans, compared to 38% in 2020.

Debt consolidation also remains popular with one in five using equity release in this way (19%), compared with one in four in 2020 (25%).

Customers have also been using equity release to purchase a new property, with 15% of loans used in this way in the first nine months of the year. This compares to 10% of loans used in this way in 2020.

Alice Watson, head of marketing, insurance at Canada Life, said: “The reasons for advances on property using equity release shows a changing pattern of use but the main driver continues to be clearing an existing mortgage, likely due to the volume of maturing interest only mortgages.

“But looking beneath the surface reveals a diverse mix of demand, which include new property purchases, no doubt buoyed by the recent stamp duty holiday. Lifestyle purchases remain less attractive, with fewer customers using equity to fund new car purchases while we have yet to witness a bounce back in the number of advances to fund holidays.

“The pandemic has shone a spotlight on the nations finances and the equity release industry has stepped up to the mark by providing flexible products that can be used for a variety of purposes. As we emerge into the ‘new normal’ the equity release market will continue to provide an overview of the nation’s financial priorities and with the help of a financial adviser, their clients can plan and secure their financial futures.”