Saturday, 12 May 2007

Why do mortgages matter?

The same Scripture that forbids sexual acts between people of the same gender also forbids charging interest on a loan: “Do not charge your brother interest,” says Deuteronomy 23:19, “whether on money or food or anything else that may earn interest.”

But as has frequently been observed, Scripture also forbids eating shellfish and wearing clothes woven from two different kinds of cloth. Yet Christians are quite prepared to disregard these instructions, just as they no longer sacrifice bulls or goats for the forgiveness of sins.

So does charging interest come under the category of laws we no longer need to keep ‘to the letter’, or does it belong with the commandments against theft or murder which we regard as expressing binding principles?

Modern Christians assume the former is the case. Charging interest on loans is accepted as a fact of life. Yet until the end of the middle ages, it was treated as a sin.

And in fact the Bible seems to support the latter view. In the words of Ezekiel we read this extraordinary warning:

“If (a man) fathers a son who is violent, a shedder of blood, who does any of these things (though he himself did none of these things), who even eats upon the mountains, defiles his neighbour’s wife, oppresses the poor and needy, commits robbery, does not restore the pledge, lifts up his eyes to the idols, commits abomination, lends at interest, and takes profit; shall he then live? He shall not live. He has done all these abominations; he shall surely die; his blood shall be upon himself.” (Ezekiel 18:10-13)

It seems odd to argue that we must not murder, commit adultery, oppress the poor, rob and be an idol-worshipper, but that we may nevertheless charge interest on a loan. Indeed, the medieval prohibition on charging interest was based entirely on the understanding that it was immoral.

The reason for this is not hard to discern. If a person invests capital in a business venture, they are entitled to a share of the profits. If the business makes a loss, that is the risk they take. No one has ever suggested that such an arrangement is immoral or unjust.

But what if someone lends money to someone else to make a purchase they could not otherwise afford? This is where the moral issue arises, because if the lender takes a profit on the loan it is clearly at the expense of the borrower. And how can that be right?

If the borrower absolutely must make the purchase, for example to buy food, then the lender is taking advantage of their poverty. If the borrower does not need to make the purchase, the lender is taking advantage of — indeed is encouraging — their avarice. Moreover, the process becomes a vicious circle. The lender who profits on the loan is thereby in a position to lend more people money. Meanwhile, the ‘have nots’ are naturally encouraged by seeing what others have bought with their loans to become ‘haves’, and so incur debt themselves.

The result is all around us in society. First, we have those sorry souls, running into tens if not hundreds of thousands, whose credit card debt alone is crippling them. One only has to turn on day time TV and look at adverts offering various ‘solutions’ to debt to realize both the size of the problem and that many of those it affects are not even in full-time work. They have borrowed their way into misery and the results are astonishing.

According to the charity Credit Action, the average UK household debt excluding mortgages is £8,833. The average owed by every UK including mortgages is £28,024. Average consumer borrowing on credit cards, etc, is £4,550 per , and Britain’s personal debt is increasing by £1 million every 4 minutes, with the result that each household pays an average of £3,525 per annum in interest alone.

In the light of this, it is perhaps not surprising to discover that almost 300 people are becoming insolvent each day. Indeed, the average Citizens Advice Bureau client has a debt nearly 17.5 times their monthly income which would take them seventy-seven years to repay.

Personally I find it hard to understand why those in the Church and elsewhere who can recognize the problem of debt regarding Third World countries do not similarly acknowledge and demand action on the no-less debilitating problem of individual debt in our own society.

Then we have those who are slaves to their mortgages. Yet the rising cost of mortgages is simply another part of this bleak picture, no different in principle from the debts owed on a credit or store card. People will complain that they must borrow enormous amounts of money to get on the housing ladder. And naturally there will be people willing to lend it to them.

But in reality, there is no necessity for this system of loans and credit and it is simply not true that economic enterprise would dry up without it. On the contrary (as TV adverts also remind us constantly) there are many opportunities to invest where the value of shares may go down as well as up.

Some people may ask who would invest in such circumstances, to which the biblical answer has to be anyone except those who can’t afford it or the greedy. Others will object that surely the money they put in the bank should be allowed to earn a modest amount of interest, to which one only has to point to Credit Action’s statistics and observe that high street banks are one of the key lenders in the UK market. In other words, one man’s ‘modest interest’ is another man’s mounting debt.

And what about houses? According to Credit Action’s statistics, the average price of a house in the UK in 1969 was under £10,000. Today it is over £200,000 and climbing exponentially. So what is driving up the price of houses? In the final analysis, it has much to do with the availability of money to borrow. People, desperate to get on the ‘housing ladder’, are taking out loans more than three times their annual salary. And in a quarter of cases these are ‘interest only’ mortgages which do nothing to pay off the actual capital sum borrowed.

In the face of this, the Bible’s injunctions begin to seem refreshing rather than obscurantist: “Lord, who may dwell in your sanctuary? Who may live on your holy hill? He ... who lends his money without usury and does not accept a bribe against the .”

(And by the way, in case you’re wondering, I’ve not had an interest-bearing account for something like twenty years, and on principle I try to ensure that the value of all my investments can indeed go down as well as up. So far, I seem to be no worse off.)

Revd John P Richardson
12 May 2007

If you enjoyed this post, you may also like to download a previous article of mine, Losing Interest (pdf)


  1. Great post - something I've mused on a lot myself - and I wholeheartedly agree that it is something that the UK churches need to get involved in _here_.

  2. Interesting article John.

    Can I assume that as you are a Vicar you don't have a mortgage either?

    How can those of us who are not provided homes by virtue of their job, afford a home.

    I suppose I could rent a home, but rents these days would outweigh my current mortgage.

    I would love to be out of debt, but few are the people who can buy a home without borrowing at usury.

    Any suggestions?

  3. Sam, thanks for the comments.

    Anon, you're quite right, I don't have a mortgage, although of course when I started in the job it was assumed (a) you didn't really need one and (b) a modest 'with profits' endowment policy would take care of housing on retirement. Of course, what has happened in the last thirty years is that house prices have gone through the roof and well out of reach of my retirement plans. C'est la vie.

    On the question of what you yourself might do, if it was me I would swap to an Islamic mortgage, as arrangeable through Lloyds or West Bromwich Building Society. This would at least get rid of the interest component in the mortgage.

  4. I've always understood usury and interest as two different things.

    Interest is simply getting back more than what you are owed, as agreed upon by the borrower.

    Usury is lending money to a borrower and then ruining him/her when he/she is unable to pay back the money owed. This would be in the form of taking possession of his/her house, goods and putting him/her into slavery.

    The normal charging of interest can be seen as being alright in passages like Matthew 25:14-30 and Luke 19:11-27. Deuteronomy 23:20 gives the green light for interest to be charged to non-Israelites. Then of course there is Proverbs 28:8 "Whoever multiplies his wealth by interest and profit gathers it for him who is generous to the poor."

    Bankruptcy laws in the modern world prevent usury from taking place.

  5. Hi Salient. Thanks for your comments, especially as I truly think this is an important subject which needs discussion.

    On the usury/interest distinction, that is actually relatively late. There is an interesting article on New Advent's 'Catholic Encyclopedia' site covering the historical background, where it can be seen that between the middle ages and the modern period the Church was united in opposing any charging of interest on a loan. See

    Of particular significance is the opinion of Pope Benedict XIV "On Usury and Other Dishonest Profit, November 1, 1745", where he states, "One cannot condone the sin of usury by arguing that the gain is not great or excessive, but rather moderate or small; neither can it be condoned by arguing that the borrower is rich; nor even by arguing that the money borrowed is not left idle, but is spent usefully, either to increase one's fortune, to purchase new estates, or to engage in business transactions."

    It is, as I say, simply an opinion, but nevertheless it shows how the concept that 'usury' is only 'ruinous interest' is not the view of past ages.

    As to the biblical material, it is significant, surely, that in the parable of the talents the Master says to the third man " ‘You wicked, lazy servant! So you knew that I harvest where I have not sown and gather where I have not scattered seed? Well then, you should have put my money on deposit with the bankers." The implication is that this is how the bankers (literally 'trapezites') make their money.

    For an interesting article on the latter, see

    Can I also commend my own article on "Losing Interest" which you can find on this blog?