HSBC is to pilot a scheme that will allow intermediaries to offer the bank's Shariacompliant Islamic mortgages to borrowers.
From April 19 the product will be available to a selected number of intermediaries who have experience and an interest in the niche market.
The Sharia-compliant mortgage was launched by HSBC in July 2003. HSBC buys a property and leases it back to the customer over an agreed term, typically 25 years. The customer makes monthly payments consisting of rent and contributions towards the purchase price. HSBC owns the property until the customer has made their final payment.
In Islamic terms rent is not another name for interest. It is seen as a fair payment for the use of the property rather than a charge for borrowing the money.
HSBC is looking for third party introducers to provide leads or customers interested in the Sharia mortgage to a central unit which will then send the leads on to branches which will process the rest of the deal. The procuration fee will initially start at 0.15%.
Noaman Hasan, head of HSBC's Amanah Finance UK division, says: “Because this is a niche market operation not every third party introducer or IFA is involved. The people who are interested in this market will be contacted and HSBC will visit them. After that they will be on a database from which they will be able to pass on any business.
“For the first month, we're regarding this a test run because we need to see whether the system works and whether there are any teething problems. That is why for the time being HSBC is targeting a select group of people. After this it will be opened up to the wider market.”