Islamic mortgages examined in wake of Dubai crash

Wed, 07 Sep 2011
A number of questions have been asked of Islamic mortgages in the aftermath of the Dubai property crash.

Designed to allow people of the Muslim faith to buy a house without contravening Sharia laws on the paying or receiving of interest, the home loans are becoming increasingly popular among buyers from all faiths.

However, with many Dubai residents struggling to pay their mortgage payments after a market crash and job losses, KippReport.com has looked at how far lenders should go to protect borrowers.

It noted that Islamic mortgage providers claim to be 'ethical', but Thomson Reuters global head of Islamic finance Rushdi Siddiqui told the website that this can be hard to define.

"Ethics is embedded in the contracts that Islamic finance institutions utilise on a daily basis, and these are not necessarily apparent to the public eye, due to the conditions in which they are activated," he said.

"We have to remind ourselves that Islam does not discourage profit motives, it only forbids the unethical forms of profit taking or profiteering."

Mr Siddiqui added that Islamic finance is about risk sharing, so lenders should only go so far to protect their business partners - the property buyers.
Salaam-u-Allaikum
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