Six weeks on from the market reopening after being frozen by the pandemic, sales agreed throughout the UK were 4 per cent higher than pre-Covid-19 levels, according to Zoopla. 

As the market recovers it’s crucial that we consider new trends observed during lockdown. We’ve seen many global businesses pledge to enable a greener recovery and rising public interest in leading more ethical lifestyles. 

This is an opportunity the intermediary market should be aware of, and it’s one that we plan to take advantage of as we see the volume of home finance and buy-to-let applications coming through the intermediary channel increase significantly in 2020, aided by the bank’s investment in colleagues who specifically serve this channel.

Research we commissioned with YouGov shows that 37 per cent of all British adults believe choosing an ethical financial service provider is as important as issues such as recycling, and 75 per cent of all British adults believe living a more ethical lifestyle is important. With many consumers practising more self-sufficient lifestyles as a result of the Covid-19 outbreak, it is likely that this sentiment will have increased.  

Consumer awareness of the impact of their investments appears to be on the rise too – and home finance is not exempt from this trend. Al Rayan Bank has worked closely with the intermediary channel over the years to articulate its Sharia compliant ethical proposition to Muslim and non-Muslim audiences alike. 

Unlike conventional mortgages, Al Rayan Bank’s Sharia-compliant home purchase plans and BTL purchase plans don’t involve interest charges and are based on the principles of joint ownership, whereby customers can buy or refinance property as a partner with Al Rayan Bank and pay rent on the share that the bank owns. 

Each monthly payment made increases the customer’s share in the property and at the end of the finance term they will own their home outright.

As an Islamic bank, Al Rayan Bank also guarantees that it will only invest in secure asset-backed activities. This means that unlike many other conventional banks, Al Rayan Bank can promise its customers that their money will never be invested in any activity considered unethical under the principles of Islam, such as those connected with gambling, alcohol, pornography or arms.

In addition, as an ethical, Sharia-compliant provider, the fees we charge to our customers are reasonable and reflective of the time and effort of the Bank and its employees. 

This makes our Islamic mortgage alternatives well suited to first-time buyers, who are often personally invested in responsible spending. According to a study carried out by Nielsen, despite the fact that millennials are having to find their way during one of the most challenging economic climates in the past 100 years, they continue to be willing to pay a premium for sustainable products in line with their values.

It’s hugely important for the future of the housing sector and UK economy at large that banks work hard to finance the FTB market responsibly. And we are very proud of the fact that – through our low deposit 95 per cent and 90 per cent finance-to-value HPPs – Al Rayan Bank is the only Islamic bank in the UK to support FTBs.

As well as supporting this segment of the market, we have recently made it easier for customers who want to move their existing home finance, Islamic or conventional, to an ethical, Sharia-compliant alternative.  

Our fees assisted range of HPPs sees the bank help with customers’ refinance costs by waiving or contributing towards some of the upfront fees normally associated with refinancing home finance from one provider to another. In addition to benefits, such as up to £600 contribution to valuation fees and £300 cash back upon receipt of the first month’s payment, we have also reduced rental rates by 0.15 per cent.

We want to ensure that Sharia compliant options are available to consumers who can afford the payments on their home finance but may not have a large deposit saved, and we also hope that by reducing the rental rates on our fees assisted range, more consumers will be able to move their finance to an ethical, Sharia-compliant product more in line with their values.

Maisam Fazal is chief commercial officer at Al Rayan Bank