Islamic or halal mortgages respect the beliefs of many Muslims who oppose adding interest in financial transactions. However, the loan comes with fees and can take the form of a long-term lease. Moreover, Islamic loans, unlike usurious loans, are based on the principle of Murabaha.

It is worth noting that the number of financial institutions offering this type of mortgage is limited in Canada, but it is increasing.

In the same context, Zuhair Naqfi, founder of Eqraz company in Oakville, a suburb of Toronto, the capital of Ontario province, said, "There is strong demand for Islamic loans, even without much publicity."

Canada is about 20 years behind in Islamic financing compared to other countries like the United States and the United Kingdom, according to Zuhair Naqfi, the owner of a financing company that adheres to Islamic law.

An Islamic loan is known as a type of financing that any client can obtain from any Islamic banks or banks granting Islamic loans or financings, provided that its calculation complies with the laws, rules, and provisions of Islamic Sharia, so that the granting bank practices Murabaha instead of taking interest and profits. Meaning that fees are imposed instead of added interest. The lender can also retain ownership of the home until the borrower repays the mortgage, which is paid in the form of a long-term lease. Also, the sources of Islamic mortgage financing must be halal. Additionally, the lender cannot seize the property in case of default, unlike traditional mortgages.

The Bank of Canada also considers that raising interest rates will be more painful for homeowners who chose variable-rate mortgages.

Naqfi sees that "the presence of few institutions currently offering Islamic mortgages in Canada contributes to the high borrowing costs." He also explained that lenders add a margin of 1.5% to cover their expenses. As a result, the cost of Islamic mortgages increases by about 4% compared to those of Canadian banks like RBC or Scotia, for example, he says.

For his part, Thomas Lukaszuk from Halal Financial Corporation in Canada, based in Edmonton, said, "The risk is greater for the lender because Islamic restrictions prevent him from seizing the properties in case of default."

The owner of the financial institution that provides Islamic loans explained that for them, there is a higher risk which increases the cost, in addition to having a much smaller pool of borrowers.

Naqfi also hopes that borrowing costs will decrease over time if more lenders realize the risks are not very high and join the market.