The Canadian housing market has been retreating due to increased interest rates over the past year. What was once a dominant sellers’ market has slowly become buyer-friendly as current homeowners cannot keep up with the rising interest rates. However, within this mayhem and the worrying housing price bubble, a niche area of housing financing is booming, particularly for a specific religious group: Muslim buyers.
The prominent Christian financing hegemony entrenched in Canada lacks the flexibility that Islamic law requires for financing. Over a million Canadians identifying as Muslim are disproportionately left out of the personal freedom land ownership permits. When an individual can own a property rather than rent, their financial capabilities and opportunities widen tenfold. They can mortgage their land for access to liquid assets, rent it out for higher disposable income, or sell it for profit. Owning is among the many economic factors related to higher success in secure finance and retirement.
For practicing Muslims, paying or receiving interest is not permitted. Money has no intrinsic value, and entering financing transactions must meet certain strict conditions under Islamic law, thus preventing them from taking advantage of conventional mortgages. Noticing this gap in the mortgage market that is not reaching many individuals, an Edmonton-based startup, Canadian Halal Financial Corp., has successfully met some of the demands in the home purchasing market in Alberta’s Muslim community. Since its launch in December of 2021, over 600 applications have been approved, with dozens coming in weekly. While Islamic financing isn’t a contemporary idea, its fragmented presence throughout the country has enabled the exclusion of most Muslim communities. Muslim financing has been conducted with a lack of a consistent standard.
The process was onerous and took years of discussions between scholars, religious leaders and lawyers. Canadian Halal Financing complies with Islamic principles on the authority of two fatwas (a form of religious edict), one from a committee at Al Rashid (Canada’s oldest mosque) and the other from Al Azhar University in Egypt (one of the world’s oldest sources of Islamic jurisprudence).
It is acceptable to profit from a religious perspective, but this profit cannot be interest-based. The company offers two types of halal financing, charging a total fee over and above the home price that is not based on interest. Both types of financing require a down payment of at least twenty-five percent and regular payments until the home is fully paid. The contracts may only have two parties, the company and the buyer, with no involvement from other financial institutions or insurers. Although the company cannot mix its funds with interest-bearing products, capital may be raised, or credit lines used to fund its business from financial institutions such as banks, pension funds or private wealth funds.
Canadian Halal Financing solves an issue that conventional banks weren’t willing to accommodate. The insufficient options presented to the Muslim community speak to a larger problem: traditional financial and legal systems are unwilling to accommodate religions outside of “WASP” cultures. The years of work it took for a community to access appropriate financing as much as any other Canadian deserves signals the reluctance of traditional methods. This reluctance is not siloed exclusively to the private financing sector, as the government’s neglect mirrors its static development. Hopefully, this corporation can grow outside Alberta and provide consistent banking services that Muslims deserve throughout Canada.