TAMEME, MOHAMMED,EL,KHATIM,M (2009) Demand and Supply Conditions of Islamic Housing Finance in the United Kingdom: Perceptions of Muslim Clients. Doctoral thesis, Durham University.
An important aspect of Islamic finance in the retail market has been the introduction of mortgage products for housing finance. These are offered by a number of banks in the UK. The aim of this research is to examine the characteristics of the UK market for Islamic mortgages and to analyse the activities of the major institutions involved. Supply and demand conditions are explored.
This study evaluates the development of Islamic housing finance in the United Kingdom by focusing on the following main areas: First, it investigates whether there is any effective demand for Islamic Mortgages in the UK. Second, the study evaluates the perceptions of UK Muslims towards various aspects of Islamic mortgages and provides an empirical assessment of these perceptions. Also, the study analyses how Muslim client attitutes and the overall environment affects preferences for Islamic mortgage products. Third, it investigates the factors which might encourage or discourage home-buying among UK Muslims. Fourth, it investigates the current structures of Islamic mortgages and examines whether these play a role in helping low-income groups from the Muslim community to achieve home ownership. Fifth, it investigates the current practices surrounding Islamic mortgages to identify the obstacles and factors influencing decision making with the aim of suggesting possible remedies. The study also evaluates accessibility issues with the objective of defining effective ways of raising awareness in the Muslim Community. It also discusses the marketing of Islamic mortgages and investigates the importance of product awareness by bank staff. Furthermore, it explores in detail the role of religion, Muslim households’ consumer preferences and the prospects for Islamic banks cross-selling mortgage products to Muslim customers. Finally this study investigates the factors influences clients’ choices of Islamic mortgage providers.
In fulfilling its aims and objectives, this study has utilized both primary and secondary data from the UK. A survey questionnaire was conducted among the Muslim community in London. Non-parametric procedures and tests have been used to analyze the data collected.
The findings of the study demonstrate that there is a gap in home ownership among British Muslims compared to the general public, which is determined by affordability, financial exclusion and information gaps. In addition, this study found that there is substantial potential demand for Islamic mortgages in the UK, which requires effective but also sound marketing strategies. Perception and opinion analysis also indicated that wider social factors and lifestyle choices may be increasing the demand for Islamic mortgages. Moreover, the findings also demonstrate that perceptions of Islamic mortgages are similar between different ethnic and tenure groups. Some Muslim ethnic groups are more willing than others to take on an Islamic mortgage even if it is more expensive than a conventional mortgage.
The study concludes that the prospects of Islamic mortgages in UK are promising and, unlike conventional bank mortgages, they are not financed by borrowing from wholesale markets, but rather from Islamic deposits. Islamic housing finance has proved sustainable, and has not been subject to the problems associated with sub-prime defaults. On the other hand a careful risk appraisal by Islamic institutions providing housing finance has made it more difficult for low-income Muslims or those with less secure employment to obtain Shariah-compliant mortgages.
|Item Type:||Thesis (Doctoral)|
|Award:||Doctor of Philosophy|
|Keywords:||Regulation, Finance, Banking, Housing, Mortgage Design, Consumer Behaviour, Islam, UK|
|Faculty and Department:||Faculty of Social Sciences and Health > Government and International Affairs, School of|
|Copyright:||Copyright of this thesis is held by the author|
|Deposited On:||21 Dec 2009 13:25|