Almost a third of plans were used to refinance a mortgage, while a fifth went towards unsecured borrowing and a further fifth were used to help wider families, according to equity release adviser Key.
In total, £755m was transferred between the generations in 2020, with 43 per cent of these gifts earmarked for housing deposits and 26 per cent for an early inheritance.
Overall plan sales dropped by 12.5 per cent, while total value of equity released dipped 4.4 per cent.
However, the average amount released increased by 9.2 per cent from £77,735 in 2019 to £84,919 last year.
Loan to values remained at a similar level year on year at 26 per cent, while average interest rates fell to 2.8 per cent in Q4, down from 3.15 per cent in the same period a year earlier.
Drawdown remained the most popular product during the year accounting for 70 per cent of all sales.
Wil Hale, chief executive at Key (pictured), said: “While 2020 is down on 2019, the fact that we have only seen a 4.4 per cent drop in the value of equity released suggests that customer demand remains strong supported by the efforts of advisers, lenders and other service providers in this challenging year.
“Discretionary spending has fallen as equity release increasingly looks to support clients’ aspirations to help their families and make their finances as resilient as possible by refinancing debt.”
Hale added: “With the end to the stamp duty holiday on the horizon, it is also not entirely surprising to see that many older homeowners have taken the opportunity to pass wealth down the generations and help children or grandchildren onto the property ladder.
“While this may change as we head into 2021 and the holiday comes to an end, I suspect the desire to help families will remain a strong driver of this market in years to come.”