Islamic home financing: factors considered by home buyers in Segamat, Johor / Nur Izzati Putri Rahman

As home is a basic necessity and people fulfil the needs by means renting, building their own house or purchasing it. However, buyers normally go to the bank for a financing facility for home mortgage whether Islamic or Conventional. Thus, conventional home mortgage are interest based and forbidden in Islam. The Islamic home financing has been regarded as an important source of profit, growth and competitiveness and considered as a major economic sector in Malaysia. Accordingly, Islamic financial institutions have introduced a number of Shariah compliant modes for home ownership, which are the al Bay Bithaman Ajil (BBA) and the Musharakah Mutanaqisah Partnership (MMP) contracts. Consumer preference for Islamic home financing plays a crucial role for Islamic banks due to its ability to predict consumer demand on Islamic home financing products. Consumers' views on the existing and new Islamic home financing products are generally taken for granted by Islamic banks, despite that the consumers are the main stakeholders for the Islamic banking institutions. Therefore, the consumer's views are considered when Islamic banks intend to improve their Islamic home financing facilities. This research aim is to study the factors considered by home buyers towards Islamic home financing in Segamat, Johor such as prohibition of riba, Shariah principle, transparency in transaction and service provision. This research is based on questionnaire survey and the data were collected from 100 respondents. The data was analyzed by using SPSS version 22.0. The result of the study suggested that prohibition of riba and transparency in transaction have significantly related to the customer's preference towards Islamic home financing.