The value of new equity released in the second quarter of this year came to £521m, a 45 per cent drop on the first quarter figure of £949m, Key’s market monitor reports.

The number of customers who used equity release dropped too, from 11,495 in Q1 to 8,374 in Q2.

The total value of plans was £1.32bn in Q1 and £767m in Q2.

Comparing half yearly figures shows less drastic differences: in H1 2019 there were 22,126 new customers who released £1.68bn of new equity. In H1 2020, these figures read as 19,869 and £1.47bn.

Meanwhile, the total value of plans in H1 2019 was £2.4bn and in H1 2020, £2.1bn.

Key chief executive Will Hale says that Covid-19 has impacted the equity release market in several ways: “Not only are cases taking longer to complete but it is only appropriate that people are delaying their decision to access their housing equity due to the current uncertainty.

“[However], demand has remained strong as more customers explore how housing equity could help them support them in later life and, as we move to more normal trading conditions, we are confident that these macro drivers will ensure that we will return to growth by year end and into 2021,” he says.

The Key survey also shows that in Q1 of this year, 25 per cent of equity release customers used the money to repay a mortgage. This jumped to 31 per cent in Q2.

The biggest change in the opposite direction was in holidays, where the 8 per cent figure for Q1 halved to 4 per cent in Q2.

Home and garden renovations also saw less equity headed their way, dropping from 17 per cent of customer share to 14 per cent quarter-on-quarter.

Additionally, the report shows that 12 per cent of equity release customers changed their plans in H1 2020 compared to 5 per cent in H1 2019, which Key puts down to low interest rates.

Hale comments: “Far from shoehorning people into unsuitable products, less than 10per cent of those who contact Key end up taking out equity release and I suspect that this is a trend seen by other brokers too.

“Instead, these customers move house, find support from family or decide that this is an option that isn’t right for them at the moment but might be something to discuss further in future. As an industry, we are learning the lessons that Covid-19 is teaching us and while 2020 may not be remembered for being a year of double digit growth, I suspect we will come out stronger with better systems in place and an even firmer customer focus.”

More2life chief executive Dave Harris says: “While 2020 has been a year that very few could have realistically predicted, the strong underlying trends that have driven the market over the last few years remain and we expect to see a return to more normal trading conditions towards the end of the year.”

AirGroup chief executive Stuart Wilson adds: “No sector was going to be unaffected by Covid-19 and the impact of lockdown, and equity release is no different.

“However, despite the anticipated fall in customer numbers and released equity in Q2, we’ve already seen something of a bounce back and it’s clear that later life options are going to be more in demand… especially when you consider that more older customers are utilising products to pay down mortgages and debt much more frequently.”