Wednesday, February 08, 2023

Why Islamic Mortgages Are More Expensive

As many of my friends may know, I have done a lot of digging (and writing) on Islamic mortgage options available to potential homebuyers who want to avoid interest. At one time, it could be said that most are scams, but that is no longer true. There are some options available nowadays, but of course there are big problems with all of them. Not all are 100% Islamic (sadly), but some are better than others.

I am writing this post to explain why when you go to an "Islamic" mortgage, you actually end up paying more. There are two main reasons for this.

Reason one: the Islamic "bank" is actually borrowing the money themselves from a credit union or a bank. This is far more common than you think, and of course the "Islamic bank" has to really pay interest on that loan. They in turn collect that from you the home buyer, but call it profit margin. And since it's usually 0.5% more than the interest rate they themselves pay, it's really profit for the Islamic bank also.

Essentially they are the middleman and you are paying them. So you have to ask yourself, how Islamic is all this really? You are not paying interest, the "Islamic bank" is neither collecting nor paying interest (allegedly), but somehow that underlying credit union or bank is still getting interest. Who is fooling who?

Reason two: The Islamic bank has rich investors (usually from abroad like Malaysia, Kuwait or Saudi Arabia), and has to offer them better investment rates than the bank bonds. 

So for example you can right now buy a Gov of Canada GIC bond and get rate of 5%. It's risk free and in 5 years you get your principal back as well. So why would these investors not buy a bond, but loan to a poor Muslim such as you or me to buy a home? So they get a better return than the bond, of course. 

And since you cannot make money off a loan, this whole house transaction is structured as a business partnership (shares in the house and all that). Ultimately you end up paying a profit margin of around 7-8% because these investors want to beat the bond market. 

It would be simple if the Islamic bank just bought and sold the house to you, right?  Take this example: say this investor buys a house at $500 K and sells to a Muslim family at 650K the day later. Guaranteed profit, but of course the average family will take years to pay back. Say 10 years for our example. 

The rate of return is actually 30%. But over the 10 years it's less than 3% rate of return. The investor will say, I will just buy the bond.

Hence the Islamic bank will have to entice them with a better rate. No one will buy a $500K house for $1 million, so they have to do all that shares business nonsense to structure it in a "halal" way.

In the end, none of these loans are truly 100% halal - some are just more Islamic than others. Remember, all of them renegotiate the loan very 5 years ... this is a big problem from an Islamic fiqh point of view. The problem is that they are trying to square a round hole - make money off a loan.

Thursday, January 26, 2023

An Interview on CBC The National

Last week I was interviewed for the television by the CBC - Canada's national broadcaster, the Canadian Broadcasting Corporation, for a news segment on the bank interest rate decision (a rate hike). The story was aired on Wednesday January 25, 2023, the same day the Bank of Canada raised interest rates by 25 basis points.

You can watch / listen to / read about the story, including my quotes, here: 

The National (YouTube): Bank of Canada hikes interest rates again

Digital Article: Bank of Canada raises rates yet again

CBC Radio: The World At Six With Susan Bonner

How It Came To Be:

I follow a few CBC reporters on Twitter, and during the first and second rate hikes in 2022, one of them tweeted that she would love to connect with Canadians who are seeing their mortgage payments go up. I replied to that, and she followed up with a conversation. Later on, I spoke with someone from CBC Radio. The reporter ultimately decided not to go ahead with the story, but she kept my information on record for the future.

Now I had been against these rate hikes ever since the interest rate crossed 3%, as I viewed them as excessive and not needed (simply because the source of inflation was not excess demand but supply side issues and domestic corporate concentration and profiteering). I had written on it extensively on Facebook and other social media.

The Experience:

About two weeks ago, I got a call from another reporter, who wanted to follow up with me after so long. This was going to be for The National, and this is when CBC made an appointment to come to my house and record the interview. It was a very interesting experience.

I was asked to share the story of my mortgage, and how the rising rates were affecting our family. I was asked why I decided on a variable mortgage earlier, and how I am planning to keep up with the ever rising payments. I spoke at length of my criticism of the Bank of Canada and their decisions. I also pointed out what the government headed by Prime Minister Trudeau did wrong - and they acted too late and did too little.

Overall, the CBC crew spent close to 90 minutes at my place. The whole news segment was just over 2 minutes long, and in those 2 minutes they probably aired 15-30 seconds of the footage they recorded with me, as they also interviewed other people for the story. Yet, for those 30 seconds, it was a 90 minute work, including set up.

Both the field reporter and the cameraman were extremely nice and professional. They knew I had never done any TV interview, so they knew how to put me at ease, and gave clear directions. It also provided a very interesting behind the scenes look at how those news clips are shot. 

In one of the scenes, I showed them my bank statements, and showed how the payments had gone up so quickly, so fast. That clip was shot three times with three different cameras (basically I had to say the same thing thrice).

Overall, it was a good experience, and I asked the reporter why they are interviewing me (and people like me). They replied that we know what the Bank of Canada will do and say; we want to share the stories of average Canadians who are going through this crisis and carry their voice. She also lamented the fact that while many, many people write to complain, once CBC asks them for their story on camera, many of them back away.

Wednesday, January 11, 2023

As a Muslim, can I even justify voting for the Trudeau Liberals?

Let me wind the clock back twenty three years ago. We all know the horrific events that happened on that fateful day in September, and how four planes with criminals on board destroyed the lives of many people. GW Bush was the President of USA, and Chretien was PM of Canada. Chretien was a Liberal, and Bush a Republican.

Those of you who are too young to remember the times are lucky. We lived through a time where our faith was maligned every day, where charlatans like Tarek Fatah took advantage to ridicule the Islamic faith for money, and where sellouts were prevalent, helping foster a climate of Islamophobia, racism and extreme hatred. Laws would come out every other day targeting Muslims, and the very existence of Islam in North America was a question.

We survived. It wasn't easy. I remember the times USA started to discriminate against Canadians entering USA who were Muslim. It was Chretien who stood up to the Americans and gave them a stern warning. I remember the NDP leader in parliament saying Osama, Omar were all Canadian names as well. The Conservatives were conspicuous by their absence. In fact, Stephen Harper relished the environment. 

As the drumbeats for the war in Iraq started to intensify, it took all the diplomatic skills and integrity of Chretien to say 'No'. Britain couldn't do it, and Tony Blair became Bush's poodle. France said No, and were roundly punished by USA diplomatically. Canada said No, but somehow maneuvered around the diplomatic fallout by committing more troops in Afghanistan. We escaped Iraq, but I cannot forget Stephen Harper. He was the Leader of the Opposition, and was so angry we were not in Iraq that he took out an ad in Wall Street Journal, writing against Canada's decision. 

Times changed, and soon Stephen Harper became the PM. He did not change, however. In a famous interview with CBC, he said the greatest danger to Canada was "Islamicism". He scapegoated Muslims, and I have written about his Islamophobia here in an article - The Racism of Stephen Harper Conservatives

Harper led the country economically very well, particularly through the 2007-2009 crisis. However, when he finally got his majority, his true self came out. Who can forget the Niqab ban, the Second Class Citizenship rule, the Barbaric Practices phone line. Canadians had enough.

The election of Justin Trudeau in 2015 wasn't only a remedy to Harper, it was badly needed. Canada was slipping truly into a horrible place, and Trudeau and his sunny ways managed to course correct - a lot.

There was a very uneasy alliance between the political left in Canada (and USA), and the Muslim community. For the majority of Muslims are actually conservative (small c) in their values, but do not vote for the right because of Islamophobia and racism. It is still true in the USA, even though a third of Muslims there voted for Trump in 2020. This is an uneasy alliance because the main values that the left supports - LGBTQ, reduced role of marriage, gay marriage, trans sexuality, legalization of drugs, assisted suicide, extreme feminism, political correctness, cancel culture, ridiculous government benefits and large government programs, high taxes - these all run counter to Muslims and their values. Yet Muslims keep voting for the left in large numbers due to the main reason - Racism and Islamophobia by the right. It's an existential crisis versus a crisis of values.

Trudeau understood it well. On the election night of 2015, as he gave his winning speech, he spoke of the Muslim girl whose mother had asked him about Hijab (now we know the child was actually a boy). On becoming the Prime Minister, he did all the right things. He set the right tone, especially after the horrific Quebec massacre. He promoted diversity and spoke against racism and hatred. "Sunny ways", as he said, was dominating Canada. 

Yet, somewhere, those other uneasy alliances also started to creep up. For so long, Liberals had carefully walked the centre (which is why they are the West's most successful political party). Under Trudeau, the Liberals took a hard turn to the left.

Weed has been legalized all over Canada. It is now hard to walk in any major park in a city and not come across the foul smell of marijuana. It is everywhere, along with an opioid and drug crisis that seems to wreck urban centres, such as Vancouver.

Crime is out of control, especially post pandemic. Car thefts, random stabbings, house break ins, armed robbery all seem to be on the rise, along with gang violence. Many blame the Liberal's soft on crime approach, and especially their reformed bail laws, which let many violent criminals out of jail soon - only to re-offend. The right traditionally favours a tough on crime attitude (indeed many say Harper became PM because of the Boxing Day shooting in Toronto in 2005). 

LGBTQ propaganda is not just everywhere , it is in our schools and shoved down the throats of our impressionable children. It is no longer just OK to be tolerant and accept different values; we now have to renounce our own opinions and feelings about the issue. Trudeau passed the horrible Bill C16 which has led to teachers in Oakville who were born male wear giant prosthetic breasts, dress as a female and teach children, with the school board unable to intervene. Teachers are teaching rainbow coalitions to children as young as Grade 4, and in Ontario the Premier Wynne was booted after she tried to teach masturbation to kids as young as 6 years old. In British Columbia, a father has been prevented by the court from interfering with his twelve year old child's decision to undertake surgery to change gender. Puberty blocking drags and castration (called gender change surgery) are now prevalent. Trudeau even made a guest appearance on a drag queen show on TV.

Hard core extreme feminism is pushed everywhere, not least in the cabinet. You cannot write against it for fear of employment, as even licensing bodies are threatening your freedom of speech. And if you get past that, it is the government's bill C11 which is going to censure you. We should have gotten a glimpse when Trudeau forbid anyone from his own party from having any beliefs of abortion that ran counter to the main feminist view. That was an early sign which we all ignored.

It is no longer possible to have a single income family in Canada. Previously, a husband could work and earn and provide for his family while the mother took care of raising the children. This was the traditional model in Canada for a long time. Under Trudeau, his policies along with rising inflation has killed that ideal. Right now, you HAVE to work, and your spouse HAS to work, because simply there is no other option.

Trudeau is bringing millions of new immigrants to Canada without any plan. There is already lots of pressure on housing, on health care, on schools and on jobs. How can we accommodate the millions of new people while the ones here are already suffering?

As a Muslim, you may have been saved from racism by the Liberals, but they are attacking every aspect of your way of life. Your morals, the value of marriage, the reliability of good old traditional social values that made society work, the value of hard work, the value of your dollar - everything is under threat by Trudeau and his minions. 

So, the question is, can we still vote for the Liberals?

I will be voting for a man who has turned a blind eye to his own ministers giving their friends lucrative government contracts - in effect stealing from the public purse. He himself blew $30,000 on a luxury hotel in London for 5 nights. I will be voting for a man who comes after my children, my values, my religion, my speech, my worship and my wallet - every chance he gets. How can I justify voting for him?

It will all depend on the Opposition. If the Conservatives can get their act together, and show us that they have learned from 2015, and they do not intend to resurrect the racism and xenophobia, they may have a chance. After all, most of their values closely align with not only Muslims, but many immigrants.

The ball is in your court, Pierre Poilievre. 

Friday, November 04, 2022

How to win elections, Justin Trudeau style


Short answer: give lots of people money and create vote banks. Also, he has a nice smile.

In our community (Bangladeshi Canadians / South Asians), possibly 90% people here will vote Liberal. Think of why Liberals will win again (especially your vote):
  • Make us dependent on government - Create conditions by poor economic planning, such that we will have record inflation (worst in 40 years), so that there is no choice but to hope for a handout from the government, rather than through hard work
  • Empower a minority through laws such as Bill C16 and censor opposition through Bill C11 such that you cannot talk against said minority, who will consistently vote Liberal. Remember the teacher who wore prosthetic boobs, and all the weed smoked all the time at all the parks in Canada? They will all vote Liberal.
  • Keep immigrants and minorities weak. This is very important. You cannot empower minorities and immigrants too much. Otherwise they become middle class and start to vote conservative. You must let them always be dependent on government for handouts.
  • Gut the middle class. This too is important. Middle class people are swing voters who do not have party loyalty. In Canada, the rich people control most of the wealth and government, so they don't care who wins. The poor (and the lazy) and the disadvantaged tend to vote Liberal . So it is to the Liberal party's advantage that middle class is gutted - hence you see all the wealth transfers and the inflationary spending and the big government programs designed to take YOUR money and give to the struggling class.
  • Final point - spread fear. Harper was a bad guy, we all know that. He has tarnished the Conservative image so much, and now Trudeau has a bonus in Doug Ford. All he has to do is point the finger at them, and scare people who ignore his other faults.
Tell me. You, the middle class, will never see a penny of the GST rebate. You will not avail the dental program, unless you commit fraud (which is being encouraged by the lax measures put in place). You will not get a place in the $10 daycare for your child. Yet, you will pay for ALL of these. As well, you will pay the banks and the rich people for your mortgage as your rates go up and up.
Now, think of all of these, and what you ignore simply because Trudeau is a pretty face:
  • only PM convicted SEVERAL times of ethical violations.
  • only PM to have admitted to GROPING a woman.
  • only PM caught in blackface, multiple times.
  • only PM who interfered in a LEGAL matter, and then FIRED the Attorney General (who was an Aboriginal Woman) because she wasn't as corrupt as him.
  • only PM who used the death of a Queen to stay in a $6000/ night hotel , get drunk and sing at the bar and party on your money
  • only PM to have created the LARGEST asset bubble in history, ANYWHERE in the world
  • only PM to have presided over the largest rate hikes in the last 31 years.
Now, cost of everything has gone up, value of your money has gone down, your paycheque buys less -- in other words, you are rapidly being pushed out of the middle class.
And you will still vote for him because he says some nice things. Even as he outlaws your religious practices and curbs your right to teach your religion to your kids the way you want. All because of a smile.
This is how Justin will win.