Someone asked me to write a post about conventional home mortgage contracts. Initially I was reluctant, as I don't like to post about fiqh issues here (some of my posts are controversial enough) and I don't give fatwa, but I think there are some important points to mention.
Firstly yes there is a difference of perspective among scholars today about whether it is lawful for a Muslim to engage in a riba-based contract to mortgage a house. The European Council for Fatwa and Research (ECFR) which is composed of a formidable number and caliber of scholars decided to conditionally allow it years ago due to need. I know of many scholars against it though, and I wouldn't be surprised if they were the majority.
Ikhtilāf in the issue exists and the average Muslim should not be censured for following something that is differed upon. Ijtihād and fatwa is not their job, their duty is to do follow a scholar. And they have fulfilled that responsibility, especially seeing as how the ECFR has some very notable scholars in it's ranks.
However, I have noticed that some observant Muslims following the ECFR fatwa fail to note the conditions of that Fatwa. It was only for Europe/Western countries where the concern was that Muslims would become ghettoized and weakened. Also it was only for the purchase of one's first house that they would live in, to fulfill a necessity. Some Muslims have used this fatwa to engage in real estate investment and take out lines of credit. That was not the point.
Now I am personally uncomfortable with this fatwa for a few reasons, and this is not just because I'm a Shafii and our school is super strict on transactions. That bias of mine becomes more apparent when I assess so-called 'Islamic mortgages'.
Firstly a mortgage contract is long. This is not a one-time concession and risk with your dīn you take that is over in a moment. Engaging in a major sin that is differed over only in application for ~20 years is serious business.
Secondly, partaking in this contract just feeds in into and becomes accepting of the oppressive modern financial system that exists. This should not be the job of the scholar and mufti. Yes their job is to ensure that Muslims can stay within the lawful and live their lives normally, but beyond that we should also be concerned about the bigger picture. Is the current financial system one that we should be content with, or is it one that needs to be replaced with something better? If the latter, then the more concessions we make for it then the less we will see the need to change it.
Thirdly, I find it upsetting that one simple change could make a mortgage contract permissible: that the bank maintain ownership of the house for the duration of the contract, so that they are leasing the house slowly to the buyer. It's not done because the bank would then be legally liable for the house for the duration of the contract. One may defend this, however for me it is just another sign of the ethical poverty of the current financial system. The rich and wealthy have an Islamic/ethical responsibility to care for the poor, governments have a responsibility to make housing affordable, and an 'Islamic' financial system should reflect such functionality. In Islam ethical behavior is not limited to charity, but financial transactions as well. A system that does not promote these ethical standards is not a system I want to be part of. I'm not going to feed the oppressive and the greedy.
Lastly, as someone with a family, I understand now when people say having your own home is important. I feel you. But I still don't think it reaches the necessity-level of other issues such as keeping your money in a bank, car insurance etc, especially when there is an alternative. A Muslim should have as much taqwa as they can. Renting is still an accessible option. The argument that 'you are just paying someone else's mortgage' is in my view, a weak argument, as you are not taking part in the mortgage contract yourself and it is textbook permissible in classical Hanafi fiqh, instead of some of the 'gymnastics' required in the ECFR fatwa.
And if you live in a place where housing is still cheap and affordable, then be thankful to Allah. It is a great blessing.
Firstly yes there is a difference of perspective among scholars today about whether it is lawful for a Muslim to engage in a riba-based contract to mortgage a house. The European Council for Fatwa and Research (ECFR) which is composed of a formidable number and caliber of scholars decided to conditionally allow it years ago due to need. I know of many scholars against it though, and I wouldn't be surprised if they were the majority.
Ikhtilāf in the issue exists and the average Muslim should not be censured for following something that is differed upon. Ijtihād and fatwa is not their job, their duty is to do follow a scholar. And they have fulfilled that responsibility, especially seeing as how the ECFR has some very notable scholars in it's ranks.
However, I have noticed that some observant Muslims following the ECFR fatwa fail to note the conditions of that Fatwa. It was only for Europe/Western countries where the concern was that Muslims would become ghettoized and weakened. Also it was only for the purchase of one's first house that they would live in, to fulfill a necessity. Some Muslims have used this fatwa to engage in real estate investment and take out lines of credit. That was not the point.
Now I am personally uncomfortable with this fatwa for a few reasons, and this is not just because I'm a Shafii and our school is super strict on transactions. That bias of mine becomes more apparent when I assess so-called 'Islamic mortgages'.
Firstly a mortgage contract is long. This is not a one-time concession and risk with your dīn you take that is over in a moment. Engaging in a major sin that is differed over only in application for ~20 years is serious business.
Secondly, partaking in this contract just feeds in into and becomes accepting of the oppressive modern financial system that exists. This should not be the job of the scholar and mufti. Yes their job is to ensure that Muslims can stay within the lawful and live their lives normally, but beyond that we should also be concerned about the bigger picture. Is the current financial system one that we should be content with, or is it one that needs to be replaced with something better? If the latter, then the more concessions we make for it then the less we will see the need to change it.
Thirdly, I find it upsetting that one simple change could make a mortgage contract permissible: that the bank maintain ownership of the house for the duration of the contract, so that they are leasing the house slowly to the buyer. It's not done because the bank would then be legally liable for the house for the duration of the contract. One may defend this, however for me it is just another sign of the ethical poverty of the current financial system. The rich and wealthy have an Islamic/ethical responsibility to care for the poor, governments have a responsibility to make housing affordable, and an 'Islamic' financial system should reflect such functionality. In Islam ethical behavior is not limited to charity, but financial transactions as well. A system that does not promote these ethical standards is not a system I want to be part of. I'm not going to feed the oppressive and the greedy.
Lastly, as someone with a family, I understand now when people say having your own home is important. I feel you. But I still don't think it reaches the necessity-level of other issues such as keeping your money in a bank, car insurance etc, especially when there is an alternative. A Muslim should have as much taqwa as they can. Renting is still an accessible option. The argument that 'you are just paying someone else's mortgage' is in my view, a weak argument, as you are not taking part in the mortgage contract yourself and it is textbook permissible in classical Hanafi fiqh, instead of some of the 'gymnastics' required in the ECFR fatwa.
And if you live in a place where housing is still cheap and affordable, then be thankful to Allah. It is a great blessing.
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