NAB to launch Sharia-friendly home loans
National Australia Bank (NAB) will soon launch a new zero-interest loan for Muslim customers.
Under Sharia law, usury – lending money with unfair interest rates attached – is illegal and many banks have looked to offer support to Muslim homebuyers looking for finance that does not conflict with this decree.
"We suspect there is demand out there, but we don’t know how big it is, so we will trial a few products first," said Richard Peters, head of community finance and development at NAB.
The group added that the trial finance initiative would also be open to non-Muslims.
Sharia-compliant home loan providers often offer to buy property upfront and then sell it to customers at a profit, with repayments to be made over a set period of time. Thus, both banks and customers can avoid charging interest on the home loan.
In February, NAB launched the StepUP personal loan programme for customers in Tasmania living on low incomes.
The low-interest loan initiative is run jointly by the bank and the Good Shepherd Youth and Family Service.
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