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What is a halal mortgage? How interest-free home financing works in Canada

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The federal government is looking at making Islamic home financing increasingly accessible to help more Canadians break into the housing market.

As part of the 2024 federal budget that was released last week, Ottawa said it is “exploring new measures to expand access to alternative financing products, like halal mortgages.”

Last month, the federal government started consulting financial services providers and communities to understand how policies can better support the needs of all Canadians seeking home ownership, according to the budget.

“Canada is home to a vibrant and growing market of alternative financing products, including halal mortgages, that enable Muslim Canadians, and other diverse communities, to further participate in the housing market,” the budget states.


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Currently, none of Canada’s big six banks offer halal mortgages, which are an interest-free payment structure that follows Islamic principles.

However, some lenders in Canada have been offering halal mortgages for several years now.

“Halal mortgages are already offered to all Canadians by financial institutions,” Caroline Thériault, a spokesperson for the Department of Finance, said in an emailed statement to Global News Tuesday.

Thériault said halal mortgages are not government of Canada products.

“The government is simply looking at ways to help more Canadians become homeowners, while ensuring adequate consumer protections are in place.”

 

What is a halal mortgage?

A halal mortgage is a real estate financing method that complies with Islamic principles and teachings.

Under Sharia law, it is forbidden for Muslims to receive and pay interest, so a halal mortgage essentially takes interest out of the equation.

Instead, the mortgage is based on the principle of profit, said Mohamad Sawwaf, founder and CEO of Manzil, a Canadian financial institution that offers Sharia-compliant services.

Manzil has been offering halal mortgages that are both partnership- and profit-based since 2020.

“We look at this product as an innovation within the Canadian mortgage marketplace to allow for a segment of the population and the broader ethical community that may want to participate,” Sawwaf said in an interview with Global News Monday.

The end result of homeownership is the same, but the process and documentation are different compared with a regular mortgage, he said.


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“Within the Islamic finance principles, you’re acquiring a real asset, it’s commodity-based, and then you are reselling it or partnering in that asset long-term, so that is the key difference here.”


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Victor Tran, a mortgage and real estate expert at Ratesdot.ca and broker with True North Mortgage, said a halal mortgage is almost like a traditional mortgage where the lender and the homeowner have shared ownership of the property, but there are extra steps involved.

He said the difference is that “instead of charging interest to the homeowner, the contract is structured in a way where there’s a fee charged.”

Even though halal mortgages are interest-free, it doesn’t mean the lending happens at a zero per cent charge, Sawwaf said.

“It just means that you’re not part of a transaction where money is being lent and you have to pay more money back,” Sawwaf said.

“That is the principle of usury within Islam and other Abrahamic faiths that we’re trying to avoid.”

Usury, which is the lending of money at exorbitant interest rates, is also prohibited in Judaism and Christianity.

 

Types of halal mortgages

Halal mortgages in Canada fall under three different types of agreements, called Ijara, Murabaha and Musharaka, according to Rates.ca.

Ijara is like a rent-to-own agreement in which the inhabitant of the home starts as a renter and becomes the owner upon final loan payment, Tran said.

Under this type of financing, the home is purchased by a trust, which then leases it to the customer.

The Murabaha is a cost-plus financing structure in which an Islamic financial company becomes the owner of a home and sells it to their client for a price that includes a profit rate, which is benchmarked against the Bank of Canada’s overnight lending rate, Tran explained.

The client enters into a purchase agreement that specifies fixed monthly payments for the duration of the contract, which is usually up to 15 years.


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Under the Musharaka arrangement, an Islamic financial company and its client become co-owners of a home, Tran said.

Throughout the mortgage term, which will follow the traditional mortgage term of up to 25 to 30 years, the financial company’s equity position decreases and the customer’s equity position increases proportionately as they pay out the owned balance.

At the end of the contract, the client will have 100 per cent home ownership and the company will have zero per cent, Sawwaf said.

 

Financial pros and cons of halal mortgages

From the financial standpoint, one of the main benefits of halal mortgages is that it introduces a long-term fixed mortgage rate, Sawwaf said.

For instance, under the Murabaha agreement, which follows the buy-and-sell structure, the mortgage can run up to 10 to 25 years.

Sawwaf said because the lender is sharing in the long-term risk, halal mortgages are “much more ethical and valuable at the end of the day” as opposed to having a debt-based system that is “not really good for society and its long-term social impact.”

However, the downside is that the costs of halal mortgages are higher because the lenders are not able to access low-cost capital, Sawwaf said.

“We’re hoping that the government signalling that they’re in support of halal mortgages with respect to potential legislation or policy changes, this could allow us to tap into institutional capital at the banks or other institutions,” he said.


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Tran said because the costs and fees are a little bit higher for a halal mortgage than a traditional mortgage, it may not be a financially feasible option for many.

Among the measures that Ottawa is exploring are changes in the tax treatment of halal mortgages or a new regulatory sandbox for financial service providers.

 

Who can apply for a halal mortgage?

Anyone in Canada, Muslim or non-Muslim, can apply for a halal mortgage, which is currently offered by a few financial institutions.

“Everyone is allowed to have a halal mortgage no different than you can go to any restaurant and eat a shawarma with halal chicken in it,” Sawwaf said.

“We don’t care what your background is, your religion, your creed, even if you’re non-religious or an atheist.”

As for the down payment, most lenders in Canada require clients of halal financing to pay a minimum of 20 per cent of the market value, or purchase price, of the house.

Customers should also have a good credit history and sufficient income to meet the monthly payment obligation, the Canadian Halal Financial Corporation says.

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STD epidemic slows as new syphilis and gonorrhea cases fall in US

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NEW YORK (AP) — The U.S. syphilis epidemic slowed dramatically last year, gonorrhea cases fell and chlamydia cases remained below prepandemic levels, according to federal data released Tuesday.

The numbers represented some good news about sexually transmitted diseases, which experienced some alarming increases in past years due to declining condom use, inadequate sex education, and reduced testing and treatment when the COVID-19 pandemic hit.

Last year, cases of the most infectious stages of syphilis fell 10% from the year before — the first substantial decline in more than two decades. Gonorrhea cases dropped 7%, marking a second straight year of decline and bringing the number below what it was in 2019.

“I’m encouraged, and it’s been a long time since I felt that way” about the nation’s epidemic of sexually transmitted infections, said the CDC’s Dr. Jonathan Mermin. “Something is working.”

More than 2.4 million cases of syphilis, gonorrhea and chlamydia were diagnosed and reported last year — 1.6 million cases of chlamydia, 600,000 of gonorrhea, and more than 209,000 of syphilis.

Syphilis is a particular concern. For centuries, it was a common but feared infection that could deform the body and end in death. New cases plummeted in the U.S. starting in the 1940s when infection-fighting antibiotics became widely available, and they trended down for a half century after that. By 2002, however, cases began rising again, with men who have sex with other men being disproportionately affected.

The new report found cases of syphilis in their early, most infectious stages dropped 13% among gay and bisexual men. It was the first such drop since the agency began reporting data for that group in the mid-2000s.

However, there was a 12% increase in the rate of cases of unknown- or later-stage syphilis — a reflection of people infected years ago.

Cases of syphilis in newborns, passed on from infected mothers, also rose. There were nearly 4,000 cases, including 279 stillbirths and infant deaths.

“This means pregnant women are not being tested often enough,” said Dr. Jeffrey Klausner, a professor of medicine at the University of Southern California.

What caused some of the STD trends to improve? Several experts say one contributor is the growing use of an antibiotic as a “morning-after pill.” Studies have shown that taking doxycycline within 72 hours of unprotected sex cuts the risk of developing syphilis, gonorrhea and chlamydia.

In June, the CDC started recommending doxycycline as a morning-after pill, specifically for gay and bisexual men and transgender women who recently had an STD diagnosis. But health departments and organizations in some cities had been giving the pills to people for a couple years.

Some experts believe that the 2022 mpox outbreak — which mainly hit gay and bisexual men — may have had a lingering effect on sexual behavior in 2023, or at least on people’s willingness to get tested when strange sores appeared.

Another factor may have been an increase in the number of health workers testing people for infections, doing contact tracing and connecting people to treatment. Congress gave $1.2 billion to expand the workforce over five years, including $600 million to states, cities and territories that get STD prevention funding from CDC.

Last year had the “most activity with that funding throughout the U.S.,” said David Harvey, executive director of the National Coalition of STD Directors.

However, Congress ended the funds early as a part of last year’s debt ceiling deal, cutting off $400 million. Some people already have lost their jobs, said a spokeswoman for Harvey’s organization.

Still, Harvey said he had reasons for optimism, including the growing use of doxycycline and a push for at-home STD test kits.

Also, there are reasons to think the next presidential administration could get behind STD prevention. In 2019, then-President Donald Trump announced a campaign to “eliminate” the U.S. HIV epidemic by 2030. (Federal health officials later clarified that the actual goal was a huge reduction in new infections — fewer than 3,000 a year.)

There were nearly 32,000 new HIV infections in 2022, the CDC estimates. But a boost in public health funding for HIV could also also help bring down other sexually transmitted infections, experts said.

“When the government puts in resources, puts in money, we see declines in STDs,” Klausner said.

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The Associated Press Health and Science Department receives support from the Howard Hughes Medical Institute’s Science and Educational Media Group. The AP is solely responsible for all content.

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World’s largest active volcano Mauna Loa showed telltale warning signs before erupting in 2022

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WASHINGTON (AP) — Scientists can’t know precisely when a volcano is about to erupt, but they can sometimes pick up telltale signs.

That happened two years ago with the world’s largest active volcano. About two months before Mauna Loa spewed rivers of glowing orange molten lava, geologists detected small earthquakes nearby and other signs, and they warned residents on Hawaii‘s Big Island.

Now a study of the volcano’s lava confirms their timeline for when the molten rock below was on the move.

“Volcanoes are tricky because we don’t get to watch directly what’s happening inside – we have to look for other signs,” said Erik Klemetti Gonzalez, a volcano expert at Denison University, who was not involved in the study.

Upswelling ground and increased earthquake activity near the volcano resulted from magma rising from lower levels of Earth’s crust to fill chambers beneath the volcano, said Kendra Lynn, a research geologist at the Hawaiian Volcano Observatory and co-author of a new study in Nature Communications.

When pressure was high enough, the magma broke through brittle surface rock and became lava – and the eruption began in late November 2022. Later, researchers collected samples of volcanic rock for analysis.

The chemical makeup of certain crystals within the lava indicated that around 70 days before the eruption, large quantities of molten rock had moved from around 1.9 miles (3 kilometers) to 3 miles (5 kilometers) under the summit to a mile (2 kilometers) or less beneath, the study found. This matched the timeline the geologists had observed with other signs.

The last time Mauna Loa erupted was in 1984. Most of the U.S. volcanoes that scientists consider to be active are found in Hawaii, Alaska and the West Coast.

Worldwide, around 585 volcanoes are considered active.

Scientists can’t predict eruptions, but they can make a “forecast,” said Ben Andrews, who heads the global volcano program at the Smithsonian Institution and who was not involved in the study.

Andrews compared volcano forecasts to weather forecasts – informed “probabilities” that an event will occur. And better data about the past behavior of specific volcanos can help researchers finetune forecasts of future activity, experts say.

(asterisk)We can look for similar patterns in the future and expect that there’s a higher probability of conditions for an eruption happening,” said Klemetti Gonzalez.

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The Associated Press Health and Science Department receives support from the Howard Hughes Medical Institute’s Science and Educational Media Group. The AP is solely responsible for all content.

The Canadian Press. All rights reserved.

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Waymo’s robotaxis now open to anyone who wants a driverless ride in Los Angeles

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Waymo on Tuesday opened its robotaxi service to anyone who wants a ride around Los Angeles, marking another milestone in the evolution of self-driving car technology since the company began as a secret project at Google 15 years ago.

The expansion comes eight months after Waymo began offering rides in Los Angeles to a limited group of passengers chosen from a waiting list that had ballooned to more than 300,000 people. Now, anyone with the Waymo One smartphone app will be able to request a ride around an 80-square-mile (129-square-kilometer) territory spanning the second largest U.S. city.

After Waymo received approval from California regulators to charge for rides 15 months ago, the company initially chose to launch its operations in San Francisco before offering a limited service in Los Angeles.

Before deciding to compete against conventional ride-hailing pioneers Uber and Lyft in California, Waymo unleashed its robotaxis in Phoenix in 2020 and has been steadily extending the reach of its service in that Arizona city ever since.

Driverless rides are proving to be more than just a novelty. Waymo says it now transports more than 50,000 weekly passengers in its robotaxis, a volume of business numbers that helped the company recently raise $5.6 billion from its corporate parent Alphabet and a list of other investors that included venture capital firm Andreesen Horowitz and financial management firm T. Rowe Price.

“Our service has matured quickly and our riders are embracing the many benefits of fully autonomous driving,” Waymo co-CEO Tekedra Mawakana said in a blog post.

Despite its inroads, Waymo is still believed to be losing money. Although Alphabet doesn’t disclose Waymo’s financial results, the robotaxi is a major part of an “Other Bets” division that had suffered an operating loss of $3.3 billion through the first nine months of this year, down from a setback of $4.2 billion at the same time last year.

But Waymo has come a long way since Google began working on self-driving cars in 2009 as part of project “Chauffeur.” Since its 2016 spinoff from Google, Waymo has established itself as the clear leader in a robotaxi industry that’s getting more congested.

Electric auto pioneer Tesla is aiming to launch a rival “Cybercab” service by 2026, although its CEO Elon Musk said he hopes the company can get the required regulatory clearances to operate in Texas and California by next year.

Tesla’s projected timeline for competing against Waymo has been met with skepticism because Musk has made unfulfilled promises about the company’s self-driving car technology for nearly a decade.

Meanwhile, Waymo’s robotaxis have driven more than 20 million fully autonomous miles and provided more than 2 million rides to passengers without encountering a serious accident that resulted in its operations being sidelined.

That safety record is a stark contrast to one of its early rivals, Cruise, a robotaxi service owned by General Motors. Cruise’s California license was suspended last year after one of its driverless cars in San Francisco dragged a jaywalking pedestrian who had been struck by a different car driven by a human.

Cruise is now trying to rebound by joining forces with Uber to make some of its services available next year in U.S. cities that still haven’t been announced. But Waymo also has forged a similar alliance with Uber to dispatch its robotaxi in Atlanta and Austin, Texas next year.

Another robotaxi service, Amazon’s Zoox, is hoping to begin offering driverless rides to the general public in Las Vegas at some point next year before also launching in San Francisco.

The Canadian Press. All rights reserved.

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