Australia’s banking system locks many Muslims out of first home buyer schemes. Here’s how to fix it |
Australia’s housing policy has come a long way over the past year, as the Albanese government tries to help more people buy their first home.
Last October, the federal government expanded its Home Guarantee Scheme, removing income caps and opening the scheme to all first home buyers with a 5% deposit.
Since then, it has also launched the Help To Buy shared equity scheme and announced major reforms to negative gearing and the capital gains tax discount.
The government claims these schemes are for everyone. One, however – the 5% deposit scheme – has a significant blind spot. The scheme operates through a panel of more than 30 approved lenders. But it doesn’t include a single Islamic finance provider offering faith-compliant home loans.
For the many Muslim Australians who observe the Islamic prohibition of riba (interest), the door remains shut unless they compromise on their faith.
The exclusion from this scheme isn’t deliberate. It’s a side effect of the way our banking system has been designed.
Here’s how Australia could follow the United Kingdom’s lead to update the system and give Muslim home buyers a fair go.
How home loans without interest work
First, it’s important to have a basic understanding of how Islamic finance (sometimes called Shariah-compliant finance) works.
The Quran, Islam’s holy book, explicitly forbids the practice of........