May 29, 2024

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Canada Explores Halal Mortgages to Boost Homeownership Accessibility

The Canadian government is embarking on a quest to broaden access to financing options, including halal mortgages, in an endeavor spearheaded by Prime Minister Justin Trudeau to facilitate homeownership, particularly within the Muslim community.

In the latest federal budget, the Liberal administration unveiled its engagement in discussions with financial institutions and diverse communities. The objective is to gain deeper insights into how federal policies can address the varied requirements of Canadians aspiring for homeownership.

Halal mortgages adhere to Islamic law, which prohibits interest charges, deeming them usury. While other Abrahamic religions also denounce usury, Islamic financial institutions offer unique mortgage and lending solutions that circumvent conventional interest mechanisms.

Despite the availability of Islamic law-compliant mortgages by some Canadian financial entities, none of the country’s major banks offer them. Analysts speculate that, while these alternative mortgages may not be entirely interest-free, they might entail regular fees as alternatives to interest payments.

The budget proposal also includes a two-year moratorium on residential property acquisitions by foreign investors, effective January 1, 2023. This measure aims to ensure housing availability for Canadian residents rather than allowing properties to become speculative assets for foreign investors.

Additionally, the government intends to extend the ban on foreign acquisitions of Canadian residential properties for an additional two years until January 1, 2027. This extension applies to foreign commercial entities and individuals who are neither Canadian citizens nor permanent residents.

In a budget presentation led by Deputy Prime Minister and Finance Minister Chrystia Freeland, the government outlined a deficit projection of $39.8 billion for the fiscal year 2024–25. This budget allocates $53 billion for new spending over the subsequent five years, with a significant portion directed towards promoting generational equity and supporting younger Canadians, especially Millennials and Generation Z, through initiatives tailored for renters and first-time homebuyers.

To offset a portion of the new expenditures, the government introduced “tax fairness measures,” anticipated to generate an additional $18.2 billion in revenue over the ensuing five years.