Key's Market Monitor report also found that the amount being released fell by 3.8%, from £839.6m to £805.2m.
Compared to the same point in 2019, equity release plan sales have risen by 6%, from 11,190 to 11,881, according to research by equity release adviser Key.
Key's Market Monitor report also found, however, that the amount being released fell by 3.8%, from £839.6m to £805.2m.
These changes were in part fuelled by the increase in the sales of drawdown plans (72% in Q1 2020, compared with 66% in Q1 2019) which provide additional flexibility by allowing homeowners to ring fence part of their release for future use.
The total of reserved drawdown rose from £349.1m in Q1 2019 to just over £390m, leaving the market value almost unchanged at £1.2 billion.
The Market Monitor found that 37% of all equity released is used to repay debt, 21% for gifting, 17% on age proofing customers’ homes or gardens, and 8% on holidays.
Of the debt being repaid, mortgages (65%), credit cards (16%) and loans (11%) were the most common types.
Those who choose equity release as an option to either repay an outstanding residential or interest-only mortgage were found to repay just over £51,000, compared to credit cards (£12,186) and loans (£11,856).
Plan sales rose in seven of the 12 UK regions, with Northern Ireland (48%) seeing the biggest increase, followed by the North West (31%) and the North East (28%).
Just three of the 12 regions saw increases in the value of new equity released, with the biggest rise in Northern Ireland (68%).
Nearly half of all the property wealth released in the three months came from the South East and London, with the South East remaining by far the biggest region for equity release accounting for 30% of all new equity and 25% of new plans.
Will Hale, CEO at Key, said: “Following a year of political and economic uncertainty the equity release market started well in 2020 and has proved remarkably resilient given the unprecedented circumstances the UK and the world finds itself in.
"Consumers are more cautious and while we are finding an increased number of people using equity release, they are taking out less and using more drawdown products to help future proof their later life finances whilst mitigating the impact of roll-up interest.
“Our new analysis of the driving force behind equity release decisions suggest that this is a multi-use product driven often by need rather than aspiration with substantially more of the proceeds being spent on debt repayment and helping family members than holidays.
"While in an ideal world, everyone would enter retirement debt free, equity release provides those who are not that lucky with real options – supported by a robust specialist advice process that is designed to help people make the right choices for their individual circumstances.”
Claire Singleton, CEO of Legal & General Home Finance, said: “These figures demonstrate that, before the lockdown, there was an increased demand for equity release.
"While this was partly driven by restored consumer confidence, it is also due to the growing recognition of equity release as a valuable product.
“It’s too early to gauge the full impact of COVID-19 on demand, but we anticipate homeowners may increasingly look to supplement their income, or support family members hit by the crisis – our recent research found that half of all over-50s are concerned about their loved ones’ finances.
"Also, as lockdown eases, people will be once again looking to book holidays, home improvements, weddings and other ‘big ticket’ items which drive demand for equity release.
“As an industry, we must respond to this by ensuring customers receive careful advice that considers which products suit them best.
"Equity release will not be right for everyone, but for many it is an extremely useful boost to retirement income”
