Federal government to begin exploring ‘halal mortgages’

Canadians from all walks of life are struggling to afford housing but what if your religion ruled out getting an interest-bearing mortgage? The feds are looking at a solution that could help not just Muslim Canadians, but anyone looking to buy a home

By Xiao Li

The federal government says it plans to explore new measures to expand access to “alternative financing products, like halal mortgages.”

According to the federal budget, the Liberal government has already begun consultations with financial services providers and diverse communities “to understand how federal policies can better support the needs of all Canadians seeking to become homeowners.”

The Islamic faith considers the charging of interest to be a form of usury, and considers gains made through interest to be unjust.

Other Abrahamic faiths – like Judaism & Christianity – also consider usury to be a sin. However, financial institutions operating in the Islamic world are unique in offering mortgage and lending products that avoid conventional interest payments.

Mortgages compliant with Islamic law are already offered by some financial institutions in Canada, though none of Canada’s five “Big Banks” currently offer them.

Speaking on background, civil servants say alternative mortgages would not necessarily be interest-free, but could include regular fees that replace interest charges.

Deputy Prime Minister and Finance Minister Chrystia Freeland tabled a housing-focused budget on Wednesday that included a projected deficit of $39.8 billion for fiscal 2024-25 and includes $53 billion in new spending over five years.

The majority of new spending had been previously announced and puts special emphasis on generational fairness and helping younger people – Millennials and Generation Zs — with programs to help renters and first-time home buyers.

The spending will partially be offset by what the government calls “tax fairness measures,” projected to bring in $18.2 billion in additional revenues over five years.

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