A Bank of England working party, which includes representatives of commercial banks and the Treasury, is investigating the wider introduction of Shari'ah compliant house mortgages in the UK, according to the Observer newspaper.
The working party has been looking at the issue for over six months and banks such as Citigroup and Barclays are “eyeing a lucrative market if they crack the problem,” the UK Sunday newspaper reports.
According to wealth analysts Datamonitor, the 5,000 richest Muslims in the UK have liquid assets of over five billion dollars and the Observer quotes the company as having no doubt “the market for Islamic finance in the UK is set to grow hugely.”
The newspaper points out that because conventional mortgages in the UK are based on interest, many of Britain's 2.5 million Muslims are losing out on the current bonanza of personal wealth brought about by home ownership. UK house prices rose by some 11 percent last year, 6,000 home loans were issued in March alone and the number of second homes in Britain is going through the million.
Specialist lenders such as the United Bank of Kuwait have been offering Shari'ah compliant alternatives to conventional mortgages in the UK but the market is not large. In addition, under current UK rules, when a home is purchased with an Islamic mortgage stamp duty is paid twice—once when the bank buys and then sells it to the individual.
High-level executives from Islamic finance houses in both the UK and the USA, where Shari'ah compliant mortgages are increasingly popular, will be taking part in a wide-ranging debate on the issue at the International Islamic Finance Forum, which takes place in Geneva, Switzerland, next month.
The International Islamic Finance Forum series is organized by the Institute for International Research offices in Dubai, United Arab Emirates (UAE), in association with the New York offices of Dow Jones. — (menareport.com)
© 2002 Mena Report (www.menareport.com)
