Mortgage regulations highlight Islamic banking growth, expert claims

Mon, 16 Apr 2007

The introduction of regulatory protection for mortgages that are compliant with sharia law has been hailed as evidence of the growing acceptance of Islamic financing options within the banking community.

Earlier this month, new rules came into effect from the Financial Services Authority, which introduce a raft of measures such as formalising the need for banking corporations to acknowledge who provided them with sharia law guidance.

It effectively means that the Islamic mortgage sector could become more transparent from now on, prospective mortgage holders may be interested to learn.

And Keith Leach, head of Islamic financing brand alburaq at Arab Banking Corporation International Bank, welcomed the change.

"Homeowners are now afforded the same regulatory protection as every other mortgage holder in the UK," he said.

"This is a highly positive new step and illustrates the growth of the Islamic mortgage market."

Prospective mortgage holders may want to consider several financing issues before agreeing to a mortgage deal.

For instance, Rob Chesters, head of mortgages at banking institution HSBC, urged homeowners recently to pay close attention to hidden expenses such as exit fees, booking levies and standard valuation costs when deciding whether a mortgage is cost-effective.

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