Scottish house price index, average house price of Halifax Bank of the United Kingdom by £ 120.137 in January 2003. To position the UK average salary of £ 27,379 (Office for National Statistics New Earnings Survey), the average home prices are on average 4.39 times almost passive. Many more of these areas in the United Kingdom in London, for example is greater than the area of Scotland and Wales is much less far. The following chart depicts, there are ups and downs the house price / earnings multiple over time, and it seems to suggest the market is now closed cyclical high.
Figure 1: Average UK House Price UK average wage of
Source: Halifax Bank of Scotland
Variability of house-price gains is, of course, reflect only the behavior of house prices.Most people know very well, the average British house prices have been constantly increasing most of the last thirty years. In fact, the last three hundred years have gradually increased the most. The following chart represents the recent growth in UK average house price.
Figure 2: Average UK House Prices
Source: Halifax Bank of Scotland
These funds will be aware that to get to know the nature of the modern system of property price increase in a compact way and that a large part of bank and building society is new money created when the loan. Loan recipients spend the money to create new houses (and cars, vacations, clothes and other consumer goods) and, right at the time and expense of the general price increase leads. Bank and building society loans (read "money") increased significantly if the real estate, buy real estate boom, leads usual. Real factors that would affect the house (built in or downloaded, for example, the quality of) the value may be completely overshadowed by economic factors, under these situations. On the other hand, if the credit reduces the property acquisitions, property prices tend to grow or even decline, the slowdown in lending, it is difficult to stop. The following graph the changes in bank loans to real estate and real estate prices shows the relationship between the changes.
Figure 3: Annual house price changes in the loan versus the annual change
Source: Bank of England, the publication Economist, Halifax Bank of Scotland
the same data can be plotted to show the relationship between price changes and changes to the loans, ignoring the time element. changes in the strength of the correlation between house prices and loans is now evident (correlation coefficient r is 0.5868 in the second):
Table 4: Annual house price changes in a corresponding change of a draw against the loan
Source: Data Figure 3
interest loans to buy homes from people who use the housing market is a very profitable position, because the credit institutions as a pump money into that house price increases, but each house purchase loan debt that remains fixed in nominal terms. If house prices rose rapidly on the value of home mortgage rate can be reduced very quickly, making the owners richer currency terms, and he sold the house to repay the mortgage. Thus, the profit of entrepreneurs logo) loan money interests, b) buy real estate, c), however, a tenant, d) the sale of assets, e) repayment of debt, f), as the surplus profit through the rental of housing. property prices and rental growth rates to maintain the profitability of the loan is, in fact, used to purchase real estate is greater than the interest rate, as traders continue to win.
People who do not own the property, however, a fairly grim. Imagine in ten years, the individual is now saving £ 50,000 in a house worth £ 50,000. Continuing house prices rise when an individual has to save £ 50,000, a house could be worth £ 100,000 or more. In fact, the value of individual savings over time compared to the price of the house, and house prices have doubled in this period is one half the other way. In short, the main banks and building societies a new devaluation of money, and therefore their business in society as a result of the production was taken as a fraud.
In short, the beneficiaries of the credit institutions are mainly credit institutions themselves (because the interest on loans) and property speculators (whose net worth increased while property price inflation). Too many owners are aware that property prices are really nothing one would need to gain. If I sell my house today and move to another house price increases do not benefit me at all, because it is more expensive to buy than I would sell my existing dwelling, I also have to pay more to buy a house I wanted.
In this context, against the Muslims in the UK has to be decided. can not buy a house, so your property at the foot of the stairs, or the rent would be? home buyers to protect their hard-earned savings in the long term value, as shown in Figure 2 the top buys.The alternative is a commercial disadvantage in the past was different. Of loans without interest to avoid, some of my Muslim friends in London has been since 1960, when Fulham cost of renting four bedroom house £ 3,000. The price of £ 1,000,000 in the same house today. Muslim tenants pay more rent than when it is not, according to purchase a home, mortgage interest, but the irony is many of these people from a Muslim is someone who actually rented a house bought with no interest loans. In addition to the landlord collected rent payment all Muslims, but also benefit from growth in property prices of £ 3,000 from £ 1,000,000. The landlord pays the interest, of course, but in general the last 40 years of mortgage payments to £ 3,000 less than 15,000 pounds, and this is not the general scheme of things, it would be much more.Under the current monetary system, the commercial rental is nonsense, in the long term.
However, if the rent, and the benefits can not be forgotten. Among them, the ability to quickly leave the property and move somewhere else, I'll maintain the freedom and the freedom from mortgage debt. freedom from sin a good Muslim, and the interest payment is greater than all of them.
If you want to buy residential property is not a Muslim, and he decided it was better now than to wait to buy a house if prices fall, the question of how to arrange financing.In this regard, and the few that are lucky enough savings to be made available, many of the Muslim community and was happy that the past performance of the UK Islamic mortgage market. It is widely believed that the financing agreement to support the end of a Muslim "democracy, property owners" want to be part of a long-term lease and to escape the economic trap. Therefore these developments, institutional credit course in the United Kingdom also has a very "Islamic" mortgage that allows the existence of untapped market for the loan you are happy, and the Muslim market, thus generating additional income.
Islamic home financing is not necessarily an Islamic mortgage (family and friends, can not be a mortgage on the property to the lender), the next three Islamic home financing is a small explanation of the existence of patterns in the Western world in general, and especially after the discovery of the United Kingdom.
Murabahah model was first applied to a retail level in the United Kingdom, United Bank of Kuwait (Al-Ahli United Bank, now known as) is. You are a person (the Bank) to buy a house in the 100,000 pounds for a person B (the house the seller) and people immediately C (the client and the future homeowner), the price of the sale, said the same £ 150,000 fee to be paid over 15 years, said. C. A person must begin the process of the character of people promising to buy a house if a person B, Person C then immediately bought A. Person shariah experts, who said that transactions of this house, in writing, is trading (buying and selling homes) and loan interest, and is halal. If traders were to argue the other bank, stock in trade is their home after a portfolio of homes must be owned by any other dealer, when in fact, shares of commercial banks as money. Without a doubt, cynicism among the Muslim community to add some money that flows only when the bank is paying customers since the beginning of the operation, as well as an alternative to interest based on the set is displayed. When seen from the perspective of the bank when the bank transfer of £ 100,000 per person B, person C agreement automatically comes into force, people who pay C £ 150,000 later, the bank will be required. This money-transfer operations of a person B, C as long as people have more to pay a certain amount is later. Money, more money later this week at home, so to speak. Many bankers supported the interests of private transactions, taking into account the standard practice of banks and bank-loan, usually nothing more than the interests of balance sheet assets. Were exceptions to this rule, such as the award jointly issued by the Royal Bank of Scotland mortgage several years ago. You went back to the property being financed banky share price increase. However, in this case, the bank refused to share the house price fall time, and, therefore, a fixed minimum return on funds borrowed at 0%.Iyár model, according to people (bank) purchases a person B (the house the seller) and the income of that person C (client) from the property. C to set the use value of the building, most modern scholars see the company as an acceptable form of housing. Bank agree to sell the house at the beginning of May Iyár lease at the end of the customer, possibly to 1 pound a nominal sum. Alternatively, customers can apply for a bank to pay a regular amount in a bank account, the amount of payments and the bank agreed to the transfer of ownership of the house will be the client. Iyár Al Ahli in the United Kingdom in the last model.
The Shariah issues in recent years the number of previous operations have been discussed. Al Ahli Iyár rent as a model of market interest rates reset annually on line.Although scholars have argued that this in itself is not haram (why I did not make their profit selling lemonade at the same percentage as the next Guy has sold the beer?) In fact, customers who know what has hired a bank to pay rent until the beginning of each new year. If interest rates rise dramatically, Iyár wage rates also rose, and the client is locked in a lease rental payment to find himself, you can not pay. Traditional scholars of Islam have made this a key reason for price determination is a fundamental requirement of any sales contract. (How can I make you want to buy something if I do not know the price?) In addition, the client can decide if that does not pay rent, Al Ahli to the contract originally provided by the bank to repay the amount of funding must be guaranteed. cases to sell the house to achieve this goal, there is an option to download the meantime, housing prices, sales repay the amount financed can be enough to start. In this case, the customer is obliged to make up any deficit, banking, and "equality" has a great negative perspective, client ... This attitude of client debts owed more than their house is worth.
Moreover, conceptually, should be a clear customer may rent only, if not its own.However, Al Ahli is the product really is a rental, why take the risk that customers will need to fall in real estate? On the other hand, if the customer bears the risk, because the owner of the property, then why pay rent to your bank? Perhaps that is the case, the customer and the organization of their own land, but the contract with Al Ahli is clear that the bank account of the whole house, on the last payment to the owner of the client, and only then the title will be transferred to the client. In fact, the core of the Islamic sale and lease were mixed, so no more about the integrity of the name. such as, What would happen if a mixture of risk should be evident from consideration of the Islamic lender is allowed Hiba (gift) to Qardu (interest-free loans), and three that Islam is a promise of access to an acceptable agreement. client money lenders' If you can not ask donors to give gift money to the interest-free loan, which will return for the promise. It would be a clear case of interest, but the tender documents should not have the word "interest" to mention.
The third model of housing finance available to UK model of cooperation must be refused. This model and judge from Canada, the Islamic Co-operative Housing Corporation Limited demonstrated over many years, and recently into Manchester in Great Britain Ansar Ansar Housing Finance Ltd. Here prequalification period required by each client is entitled to buy shares in organized housing finance, housing finance to the later to achieve. obtained in this way within the organization's funds are used to finance other clients who successfully complete the prequalification period.When the client has the right to housing finance, people (housing finance Organization) people who bought a house in B (home sellers) from the name. Person C (the customer), an association of people and a nominal vehicle, this is considered personal property becomes a member ("nominal" co-operation of the vehicle due to appear in the title deeds to the land). To this end, the C shares, the value of collaboration with people of the prequalification the vehicle body, and the relative size of the person and the person transfers his shares in the ratio of C to determine the contributions of the co-operation. C people now living at home and pay rent on the vehicle. If you rent the vehicle's shareholders, and the course of their work is distributed among C. Over time, people buy shares in the vehicle C people, and eventually come to own them all. at this stage, the full nominal owner of the house, and, therefore, applies to rental property all together. The title is the last formal step in the transfer of assets offered to the customer's last payment in connection with the production of special (see next paragraph) between the person and person C.The most common implementation of these partnership arrangements refused, and the amount of the rental contract for the purchase price per share (market value of each point in the future and not the connection) will be determined at the beginning.This model shares the purchase price of the purchase price of the property market value at the time was not well received by potential clients must be reflected at. most likely to know the customer property prices rise because the trend over time, and, therefore, is not interested in the price of their homes to increase their participation in the market value should be reflected in pay. disadvantage of this assay is that people invest in shares, many of those institutions to be able to save a backup of their homes. piece of property if the arrangement is thrown pieces, a few years ago prices were accepted fact, that real estate prices increased at the trend, the market value of these assets to be sold under the usually. This course is quite bad, and solutions to the commercial arrangements, depositors, in exchange for money that is financed.does the sale of the shares of each solution will be balanced and the market value of cost efficiency can be achieved as is. To this end, Ansar-financing products to some extent among members to share the profits or capital value of the house (pre-agreed ratio) to the loss, the nominal co-operation is finished. This is a special payment referred to above.
At present three main trade, UK Islamic mortgage market attention to the subject.Customers are concerned about the amount of the deposit, the bank is required before approval is met. HSBC New Islamic mortgage product soon to be launched in July 2003 in the United Kingdom as low as 10% (property), the client may request the backup, but Al Ahli murabahah Iyár program and now must save at least 20% from clients (17% or less reduced property values increase), and Ansar Finance refused co-operation scheme based on 20% deposit required to pre-selection period. The minimum deposit level is not competing creditors on the basis of interest, offering 100% mortgages, although Muslims, who remember the 1980 property boom at the end of the experience may see as a bad thing. On the other hand, Finance Minister Gordon Brown announced his last budget, after the double stamp duty problem (the bank paid the original seller from the buyer as a buyer and you as a customer by the Bank) is set to be neutralized. To achieve this goal, the home sale transactions that occur murabahah, for example, will probably come to surgery according to principles of Islamic finance as part of an agreement and is not seen nothing like the two sales.Thirdly, the fear of bankers in Basel capital adequacy rules, capital assets and intellectual property of a greater weight than other loans secured by real estate mortgages is provided. banks to offer mortgage loans for its venture capital interests and Islamic mortgages, which increased its lead to cost more than usual on the opposite side to the Islamic mortgage demand.
broad economic terms, promoting Islamic mortgages, interest in the domain of risk was not limited by a series. Not least among these is the Muslim bank and building society loans from Earnest disease starts when prices hit about the same as the strength of their community to other communities throughout the UK. For example, the Highfields area of Leicester, £ 60,000 to buy a standard triple-terrace house since the beginning of 2000, when the Muslims have found a similar property now costs £ 120,000 or more to buy that. Most of the Muslims, but recently the opportunity to buy a house in Highfields on loan from the bank, but the state never had to house buyers has started to get a bank loan in the first place if it will be. Those who sell and move elsewhere to take advantage of house price inflation, Highfields, but the Muslim community, which leads to more debt, into a house to live in the same move.
Although banks and building societies as a whole and the individual banks to make money from the funds the individual level, one building society loan interest rate by a higher rate and then we will. At the same time, most Islamic mortgage lenders benefit from the money invested in the beginning of a financial fix. What is the absolute level of recognition achieved (for example, 70% of the customer "win" the bank also murabahah), or the interest rate on bank loans (for example, the customer pays the same rental rate for London interbank offered rate as the upper part of the spread, Libor plus 1% per annum bank). Generally, only the bank transaction £ x, knows that is a contract and receive CZK X plus something extra later if their customers. My guess is Al Ahli to borrow money for a year Libor London interbank money market to finance his regime Iyár. Each year, the Al Ahli renew their loans to money market next year and that is why rental rate for each year of his contract Iyár Libor plus a margin equal to the amount referred to confirm the upgrade. This is Al Ahli and Al Ahli margin Iyár won agreement to ensure the very beginning of this range. If UK interest rates rise significantly in the future, perhaps the weakness of Sterling on the currency markets as a result, customers often find themselves in the Iyár problems. repossession orders were then converted to common, if perhaps less interest in Islamic mortgages can be seen in the health of domestic financial opportunities than threats.
Islamic mortgage market is large enough to make a niche for-profit organizations that are paid early, but the pace of development may be delayed more credit than the lethargy in the main body positions so that the Muslim community. reject market-based model of cooperation to promote the value I remember in 1995, Muslim housing association in London, the only director proud of its presentation to the end "we do not need to announce to the Islamic finance. We have a new five-year fixed rate loan, Barclays Bank agreed to thanks to Allah." has been "Thanks to Allah" a piece made me really depressed.
For some, the Bank of England has asked a committee to organize work on Islamic mortgages for stealing a local request is to install security alarms. For others, the mortgage interest, to pay the price of non-Muslims living in countries. What seems clear at this time there is a lot of Islamic mortgage products, cash flows and the risk of creating the initial conditions are similar to their traditional counterparts. Muslim community has ignored this fact at their peril. Antithesis is true freedom in mind interest debt, and debtor countries as a man of many creditors and the debtor is subject to your treasurer. high mortgage people who have tended to undermine the principle of the main points. Similarly, the growth of Islamic culture, a mortgage assimilation of Muslims into wider British society is a powerful force. this strategy we are now?
Islam is a political fact that removing the last serious challenge to the institutions of modern usury. Issues of Islamic finance in the world today a decision whether or not his work, success can be specified in the next few years. the worst case, only the failure of Islamic finance that will be the usual practice of usury is a form of organization to another might mean.
