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Commercial First, which offers deals for small businesses, says it's looking at this niche area but has no product launches planned.
Philip George, managing director of Commercial First, says: "We have a lot of small businesses on our books, many of which may be owned by Muslim borrowers, but we won't launch an Islamic product over the next six to 12 months. "It's an area we're looking at but we still view it as niche."
He adds: "The current credit environment makes it even more difficult, because Islamic mortgages may be harder to securitise on the wholesale market. Bond holders would want to see borrowers making interest repayments and the structure of Islamic mortgages makes this difficult."
Leach adds that while alburaq's commercial proposition will sit on its balance sheet, Islamic mortgages can be sold on to the securitisation market because rental payments can be taken into account rather than interest payments on loans.
By Leah Milner