Canada to introduce ‘halal mortgage’ options for Muslims in Canada

The Canadian government, in an effort to support Canadians seeking homeownership, has said it is looking to broaden access to financing alternatives with a particular focus on the country’s Muslim population.

In the recently announced federal budget, Prime Minister Justin Trudeau’s government revealed that it is consulting with financial service providers and various communities to cater to diverse needs of Canadians looking for home ownership.

“This could include changes in the tax treatment of these products or a new regulatory sandbox for financial service providers, while ensuring adequate consumer protections are in place,” Canada Budget 2024 announced.

The Islamic faith including other Abrahamic faiths like Judaism and Christianity do not favour charging of interest and considers it as a form of usury.

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, reported City news.

Financial institutions operating in the Muslim world offer unique solutions to mortgage and lending products that avoid interest payments.

According to experts, alternative mortgages would not necessarily be interest-free, but could include regular fees that replace interest charges, it said.

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

In another development, Canada government has introduced a two-year ban on the purchase of residential property by foreign investors, effective January 1, 2023.  The government has claimed the move aims to ensure there are homes for Canadians to live in and not just an asset class for foreign investors.