Mortgage loan

The Supreme Court (SC) has ruled on a case in which several consumers requested the annulment of theclause in their mortgage that set the interest rate to be paid based on the famousIRPH index, widely used by Spanish banks as areference in mortgage loans. The clients argued that the bankhad not informed them correctly about how this index worked or itseconomic consequences, and demanded that the Euriborbe applied to them (another index generally lower) or, at least, that the overpaid money be refunded.(another usually lower index) or at least, refund the overpaid money.

The case had been dismissed by both the court and the Provincial Court. These judgments acknowledged that the bankhad not provided all the necessary information prior to the contract as it should have, but they considered that, even with thatlack of transparency, the clause was not necessarily null or abusive.

The Supreme Court rules in favor of the bank and explains that the fact that aclause is not entirely clear(what they call "lack of transparency")does not imply that it must beautomatically annulled. For that, it is also necessary to prove that there isbad faith on the part of the bank or that there has been avery clear imbalance, that is, that the client is clearlyharmed in comparison with what is usual in the market.

In this case, it has not been proven that the bank acted in bad faith since the IRPH is anofficial, public and regulated index by the authorities, and the APR of the loan was similar to that of other similar products. In addition, theadded spread was low. The Supreme Court also clarifies that the bankwas not required to foresee or explain how the IRPH would evolve in the future, nor can the situation be compared solely with the Euribor to decide if it is abusive. Thus, it confirms the validity of the clause and rejects the refund of the amounts paid. If you are considering carrying out any type of operation or business that includes the formalization of a real estate credit contract, our professionals can advise you in the defense of your interests

If you are thinking of carrying out any operation or business that involves formalizing a real estate credit contract, our professionals can advise you in the defense of your interests