The UK’s Islamic Mortgage market to heat up

Islamic home-buyers in the UK are set to have more options as the Islamic mortgage market becomes more competitive with Gatehouse Bank announcing new home purchase financing plans on the heels of a record GBP100 million (US$130.53 million) in lending completed last year. To support its growth plans, Gatehouse also announced expansion of its underwriting team with three new hires.

It’s not surprising to see Gatehouse and other new entrants begin to challenge the market leader, Al Rayan Bank, which had record profits in 2018 and a successful capital raise by way of a commercial Sukuk issuance of GB250 billion (US$326.23 billion) last year to meet market demand. As the market leader, Al Rayan may have more pricing power and has already this mouth reduced its rental rates on 80%, 70%, and 60% finance to value (FTV) home purchase plans by 50bps. Resulting in the 60% FTV discounted variable rental rate to be reduced to 3.14%, the fixed rental rate reduced to 3.44% , the 70% FTV fixed rental rate reduced to 3.54% and the 80% FTV fixed rental rate reduced to 3.74%.

The new year kicked off with the high-level city of London delegation to the UAE with Abdul Aziz Al Ghurair, the chairman of the UAE Banks Federation, welcoming the Lord Mayor of the City of London, Alderman Peter Estlin, along with senior government and business leaders to discuss the challenges facing the financial services and Islamic banking sectors. The UAE is the UK’s 12th-largest trading partner and the largest civil export partner in the region. The delegation and meeting aspired to improve collaboration between the two countries especially given the continued economic & Brexit uncertainties.

Suhail Ahmad is the partner at Gateway Islamic Advisory. He can be contacted at suhail.ahmad@gatewayllp.com

This article was first published in Islamic Finance news Volume 16 Issue 9 dated the 28 January 2019.

The UK’s Islamic Mortgage market to heat up

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