A report by Datamonitor, an independent market analyst firm, anticipates that the Islamic
mortgage market will reach £1.4 bn in gross advances by 2009.
Since 2000 it is estimated that the Islamic mortgage sector has grown by 68 percent each year and signs show that it will continue to grow by an average of 47 percent a year.
Maya Imberg,
financial services analyst for Datamonitor and the report's author said that by mainstream
lenders entering the market, such as
HSBC and
Lloyds TSB, showed a belief that there was a substantial potential in the market.
Until 2003, Ahli United Bank was the only lender of Islamic
mortgages in the UK. In 2004 HSBC, United National Bank, Lloyds TSB and Alburaq Home
Finance then joined in.
Islamic mortgages have two categories, Ijara or Murabaha financing. Ijara mortgages are more popular but they are not regulated by the
FSA, whereas Murabaha mortgages are regulated but are less popular. However, a government working party is trying to make Ijara mortgages FSA compliant by 2006.
Thomas Dickson, partner of Dickson Lishman Prince, based in Birmingham said he felt Datamonitor's estimates were low.
He said: "Most Muslims want a Shariah-compliant mortgage. But the lack of products on the market means they are having to sacrifice some of their principles."
He went on to say that this was the case for most financial products. "As soon as Muslims are given more Islamic-compliant options, that is what they will go for."
