The federal government may implement new measures to expand access to “alternative financing products, like halal mortgages,” according to the new 2024-25 budget announced on Tuesday.
Ottawa has begun consulting with various financial institutions and service providers “to understand how federal policies can better support the needs of all Canadians seeking to become homeowners,” including Canada’s diverse communities.
For Muslims. charging interest is a form of usury, as are gains made through interest, which the religion deems to be forbidden by Islamic law.
Usury is also considered a sin in Christianity and Judaism as well, however the avoidance of conventional interest payments are currently only practiced by financial institutions in the Islamic world.
While none of Canada’s five “Big Banks” (Bank of Montreal , Scotiabank, Canadian Imperial Bank of Commerce, Royal Bank of Canada, and Toronto-Dominion Bank) offer mortgage loans compliant with Islamic law, some smaller financial institutions do, like EQRAZ and MANZIL.
Alberta also began exploring the concept of Islamic compliant financing for Albertans last year. The provincial government has been consulting with the Alberta Council of Imams and the Al Rashid Mosque in Edmonton.
According to officials, many Muslims are unable to access traditional mortgage financing because it’s prohibited under Islamic law, whereas halal financing would allow for qualified home buyers to access loans without standard interest rates added on.
“As Premier, I’m truly blessed to be able to advocate on behalf of all communities. With Alberta’s innovative approach to enable halal mortgages, more people may be able to access mortgage lending services in this province. Making Alberta an easier place to practice and live by one’s faith is an important part of building a secure and inclusive Alberta for those from all around the world who dream of a better life,” said Premier Danielle Smith at the time.
Smith’s government aims to be the first province in Canada to offer halal financing through a provincially regulated institution, which will help to give Alberta a competitive advantage to attract newcomers.
“We are laying the foundation for halal mortgages in Alberta so the Muslim community can easily own affordable housing in similar terms as regular mortgages. This initiative will allow our community greater opportunity for financing while respecting our Muslim faith,” said Omar Mahmoud, President of the Edmonton Council of Imams last year.
After being researched, the government would work towards introducing legislative amendments that would enable Alberta financial institutions to offer halal financing.
The province confirms that Alberta has the mechanisms in place to support the introduction of halal financing and that the regulatory sandbox could help introduce it in an expedited way. They say it also creates the opportunity to ensure that required legislative changes would be compliant with Islamic law.
“We are pleased to have the mechanisms in place to support Albertans with new financial solutions such as the development of halal financing through exemptions available under the regulatory sandbox. By creating a flexible regulatory environment, we can attract new and innovative financial services into the province while also ensuring Alberta consumers are protected,” said Travis Toews, President of Treasury Board and Minister of Finance.