Islamic Housing Finance

Abstract

Islamic home finance (IHF) is a form of home finance based on Shari’a law, and viewed by many as an alternative to the problems associated with conventional mortgages. IHF has grown rapidly around the world since the early 2000s, including in Western or non-Muslim-majority countries. This article explores the characteristics, evolution, and issues surrounding IHF in the United Kingdom and the United States, two Western countries where IHF has expanded most rapidly. Essentially, IHF relies on the prohibition of riba (generally translated as ‘interest’) as well as a number of other prohibitions, including the requirement that the securitisation of mortgages involve a clear underlying asset or assets.