Initiative aims to address the affordability challenges faced by Muslim homebuyers
Canada is taking steps to make homeownership more accessible to its Muslim population by exploring halal mortgages, which comply with Islamic laws prohibiting interest.
This initiative is part of a broader effort announced in the recent federal budget to address the unique financing needs of diverse communities across the country. Prime Minister Justin Trudeau's administration has started consultations with financial service providers to see how federal policies might better support Canadians affected by traditional interest-based lending barriers.
The government is considering various measures, including changes to tax treatments and creating a regulatory sandbox that would allow financial institutions to innovate “while ensuring adequate consumer protections are in place,” the government said in its budget 2024 announcement.
The Islamic faith, like Judaism and Christianity, considers charging interest a form of usury and unjust gains. Some Canadian financial institutions offer mortgage products that adhere to these principles, although they are not yet available from the country's five major banks.
In addition to exploring halal mortgage options, the Canadian government also extended a ban on the purchase of residential property by foreign investors, which initially came into effect on January 1, 2023. That marked an effort to ensure there are homes available for Canadians to live in rather than as a speculative asset class for foreign buyers.
“The government announced it intends to extend the ban on foreign buying of Canadian homes by an additional two years, to January 1, 2027,” the budget proposal read.
“Foreign commercial enterprises and people who are not Canadian citizens or permanent residents will continue to be prohibited from purchasing residential property in Canada.”
Read more: Is Canada right to reevaluate its reliance on foreign workers?
The housing-focused federal budget tabled by Deputy Prime Minister and Finance Minister Chrystia Freeland includes a projected deficit of $39.8 billion for fiscal 2024-25 and $53 billion in new spending over five years.
This spending aims to support younger generations, particularly Millennials and Gen Z, with programs designed for renters and first-time homebuyers. The plan also includes "tax fairness measures" expected to generate an additional $18.2 billion in revenue over the same period.
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