Home Affair Correspondent
A major new national study has found that British Muslims face a “financial faith penalty” when seeking home finance, with eight in ten saying their housing options are restricted because of their religious beliefs.
The findings come from a report by Islamic home finance fintech firm Offa, based on surveys of 3,000 British consumers, including 1,000 Muslims surveyed by Muslim Census and 2,000 non-Muslims surveyed by OnePoll.
According to the report, From faith penalty to financial fairness: Unlocking the potential of British Islamic home finance, many Muslims encounter slower decision-making, excessive paperwork and poorer customer service when using Islamic home finance providers compared with mainstream mortgage lenders.
Among Muslims who had used Islamic home finance, only 5% received a same-day decision, while 62% waited up to two weeks, 17% waited between 15 and 31 days, and 16% waited more than a month. The most commonly reported challenges were long decision times (28%), excessive paperwork (22.6%) and poor customer service (18.9%).
Islamic home finance products differ from conventional mortgages in that they do not charge interest and avoid investing in industries considered harmful, such as arms trading, gambling, alcohol, tobacco and animal testing.
Faith and financial inclusion
The report highlights that faith plays a central role in financial decision-making for British Muslims. More than 94% said it was important that their financial products align with their ethical or religious beliefs, yet only 12.8% currently use Islamic home finance, with a further 11.5% having used it in the past. Over three-quarters (75.7%) have never used Islamic home finance at all.
Among Muslims using conventional mortgages, over half (50.7%) said they felt unhappy or uneasy about doing so because of their faith.
Despite these challenges, home ownership aspirations among British Muslims closely mirror those of the wider population. Nearly 80% said they wanted to own a home to provide stability for their family, while 18.6% cited building generational wealth as their main motivation. Only 2.2% said they did not want to own a property.
Sagheer Malik, Chief Commercial Officer and Managing Director of Home Finance at Offa, said the findings raised wider questions about fairness in the UK’s financial system.
“British Muslims are being underserved by slow, outdated and opaque Islamic home finance provision,” he said. “This goes to the heart of financial inclusion. Faith should never be a financial disadvantage.”
Growing interest beyond the Muslim community
The research also suggests that Islamic finance principles have growing appeal beyond the Muslim community, particularly among younger people.
While 64% of non-Muslims surveyed said they had never heard of Islamic home finance, 63% said they favoured its ethical principles once they were explained. Around 43% of Gen Z respondents and 37% of Millennials said they would consider using Islamic home finance, compared with just 7% of Baby Boomers.
More than three-quarters of Gen Z respondents and 72% of Millennials also said it was important that their finance provider avoids investing in ethically harmful industries.
The report calls on Islamic finance providers, brokers and policymakers to modernise the sector and ensure faith-aligned finance offers the same speed, transparency and customer experience as conventional products.
(Photo credit: Drazen Zigic/Freepik)
