Decision day for the one million floor clause mortgages in Spain that may have paid an average of €25,000 too much

Decision day for the one million floor clause mortgages in Spain that may have paid an average of €25,000 too much

This week, finally, Spain’s Supreme Court will rule on mortgages that were linked to an IRPH rate, more than six months after Europe left it to the Spanish judges to rule on their legality or lack of transparency. While the standard Euribor rate has been negative since February 2016, the mortgages linked to the IRPH have been paying interest at around 2%. It is estimated that the average cost of overpaid interest payments to these clients could be around 25,000 euros each. The Supreme Court validated the use of the IRPH in 2017, but Court number 38 of Barcelona raised a preliminary question to Europe to enquire about the control […]

Do you have a mortgage in Spain? Find out if you are owed money by your bank…

Do you have a mortgage in Spain? Find out if you are owed money by your bank…

‘Abusive’ IRPH floor clause mortgages in Spain: A Costa del Sol court ruling obliges the banks to return everything overcharged – before the national Supreme Court rules on the matter. A judgment of the Provincial Court of Malaga has declared the IRPH mortgage rate null for ‘lack of transparency’, replace it with Euribor and orders the banks to refund the difference between the cancelled rate and the new one plus interest. The recent ruling of the Court of Justice of the European Union (CJEU) regarding the IRPH rate mortgages in Spain is so clear that many provincial courts and hearings have decided not to wait for the Supreme Court to […]

Top European court says homeowners in Spain can claim against banks if mortgage interest rates weren’t properly explained

Top European court says homeowners in Spain can claim against banks if mortgage interest rates weren’t properly explained

The European Court of Justice has given the green light to Spanish courts to rule against lenders if mortgages were sold using the ‘more complicated’ IRPH rate rather than the more usual Euribor. Around one million mortgage holders could benefit from the top court’s ruling as the IRPH rate (an average of market rates) didn’t drop as dramatically as the Euribor in recent years. The ECJ has upheld earlier judgements that say using the IRPH is only valid if the different way of calculating it is clearly explained in the contract. Spanish courts will now have to decide on a case by case basis if compensation is due from banks. FIND OUT […]

Mortgage floor clauses in Spain: Key aspects of the Supreme Court ruling

Mortgage floor clauses in Spain: Key aspects of the Supreme Court ruling

Spain’s Supreme Court, in a Judgment of May 9, declared the nullity of the floor clauses in the mortgages of certain banking entities due to lack of transparency. What is a floor clause? When you go to a bank to apply for a mortgage loan, you tend to analyse what interest rate (fixed or variable) is the one that may be most convenient when paying the bank for the different instalments. In the fixed-rate, the same instalment will always be paid from month to month. In the variable rate, the instalments to be paid usually consist of the application of a reference index set by the European Central Bank (normally […]

Door opened for a million ‘floor clause’ mortgages in Spain on ‘abusive’ IRPH rate to be cancelled

Door opened for a million ‘floor clause’ mortgages in Spain on ‘abusive’ IRPH rate to be cancelled

One of the top legal advisers in the European Union has said that about one million mortgages sold in Spain on a different type of rate to the standard Euribor can be subject to judicial review. The rate being questioned is known as the IRPH (mortgage loan reference index) and is an alternative offered to customers of banks when buying their property. It is a national average of the cost of mortgages over a period up to three years, meaning it is less variable than the standard Euribor. However, homeowners complain that while Euribor rates plummeted in recent years, the different way of calculating IRPH keeps their loans higher. Many […]