29-11-2007
New data released on take-up of Islamic mortgages
News by Adfero for Simply Business - independent providers of business insurance, business finance, landlord insurance, buy-to-let mortgages & commercial mortgages.
The UK's market for Islamic mortgages has not performed at the initially expected rate.
Data released by the Financial Services Authority (FSA) show that although a rapid rate of expansion in the Islamic mortgage market had been predicted, prospective clients remain either suspicious of such products, or do not know they exist, reports the Financial Times.
Islamic mortgages are structured in a manner that makes them compliant with sharia law, which prohibits either the charge or payment of interest on money.
Under the terms of such a product, the bank will often purchase 100 per cent of the property, with the mortgagee making payments as rent, in addition to the payment of an additional sum as a contribution to cover the gradual purchase of the property.
However, Britain remains unique compared with other European countries, as it is the only territory within the European Union where the financial services sector provides retail products compliant with sharia law.
"The Muslim community is still unfamiliar with the product. There are only a small number of banks offering these mortgages and the types of products are limited," said Michael Ainley, head of wholesale banks and investment firms at the FSA.