The Sharia scare

“I’m Muslim,” Sam said. “So I can’t.”

We were building him a retirement portfolio a few years ago. Sam told me all about riba. Also why he couldn’t own any bonds, have a regular savings account or be talked into a GIC by TNL@TB.

He explained that Muslims who adhere to Islamic law have a different relationship with money. It’s not an asset all on its own, he told me. Instead money’s just a way of measuring things – like the value of work or the cost of a bungalow in Brantford. When you look at currency like that, it’s unethical (and wrong) to receive interest income from money alone. It’s called riba, and Islamic law forbids it.

So this is why Sam couldn’t own a bond paying interest semi-annually, or a GIC that dumped an earned amount into his lap each year. Or even a bank savings account earning a piddling little amount. He had one of those, he told me, but because riba cannot be used for personal benefit, he donated those dollars to the mosque.

We solved the portfolio thing easily. Bond ETFs do’t pay interest, but dividends which represent the earned amount and any capital gain. For tax purposes these are treated either as income or gains, and therefore comply with religious tenets.

But here was Sam’s real problem: getting a mortgage.

Home loans come with a big interest component – in fact, in the early years of amortization it’s the largest component of monthly payments. For a few years Muslim-friendly mortgages have been available from a few lenders, but they’ve been scarce and expensive, owing partly to the fact Muslims don’t believe in foreclosures, either. So the cost of a ‘halal’ loan (that means ’permitted’) has been about 4% more than non-believers pay for bank mortgages.

That brings us to Tuesday last. Ottawa’s federal budget is, “exploring new measures to expand access to halal mortgages” and other non-traditional borrowings.

Well, guess what happened next?

“Trudeau bringing Sharia law to Canada!” screamed the first of a slew of comments posted to this blog (all deleted). Soon social media was more of a dank, poisonous swamp than usual. The extreme elements of historical Sharia law (lashings, stonings, amputation for relatively minor crimes plus the subjugation of women) were bandied about as if soon to come to your hood. And people wondered why, if Muslims can get mortgages without interest being charged, the rest of us can’t?

As usual, there were two things in the background. Ignorance. And political manipulation.

I’m no expert on religious laws, the Quran or Islam, but the idea behind halal mortgages seems pretty simple. The buyer still pays the lender, just in a different way and just as much (or more). In one form, the lender buys the property with the purchaser in a rent-to-own situation. Or buyer and lender enter into a partnership with ownership being transferred as lump sum payments are made. In any case, there’s a profit component built in for the finance company that equals what a traditional amortized mortgage would yield. Presumably the feds are looking to allow more lenders to get into the game by figuring out appropriate forms of CMHC insurance, now that Muslim families form a growing (5% or 1.7 million) hunk of the population.

So, a halal mortgage ain’t cheaper. Nobody gets a free pony.

But what we all get is a new way for the haters to express prejudice. Just as the MAGA adherents to the south have vilified immigrants (especially the brown ones) and as ‘Christian nationalism’ is embraced by Donald Trump, society grows darker. Sadly, the rightist and populist movements there, here and in Europe attract followers by seeking to turn the clock back, recalling a former, whiter, more comfortable and familiar world. And so the man who may become the most powerful person in the world can call newcomers to his country ‘vermin’ and ‘animals’, suggesting they are ‘poisoning’ America and its school system.

Never in a lifetime did we think this could happen. But here we are.

For the record, Muslim-friendly home loans are a nothingburger. They don’t give borrowers an advantage. They level the playing field. They do not mean Sharia law is being imposed, enacted or considered. You are not being threatened.

Also for the record, how can thinking about money this way be a bad thing? Value what it does, not what it is.

About the picture: “Your favourite millennial here,” writes Liam. “My wife and I just adopted Lenny here from a breeder on Vancouver Island. He’s adjusting to life in Montreal well, but, like his main man, struggles with the language, the sporadic street cleaning and joykill landlords.”

To be in touch or send a picture of your beast, email to ‘[email protected]’.