The European Court of Justice (ECJ) is set to publish their final ruling on whether Spanish mortgages which have or which had their interest rates set & calculated based on the IRPH index (Índice de Referencia de Préstamos Hipotecarios) are to be deemed abusive. These mortgages could then be deemed unfair, untransparent and therefore an abuse of the consumer.
This ruling would determine whether Spanish lenders will be forced to refund their clients for overcharging them for many years, which is why we feel it is important to inform our contacts.
Over the course of the last 20 years, many Spanish mortgages that were issued were linked to the IRPH Index. Unfortunately, as a result, the monthly payments for these mortgage holders have been much higher than other consumer mortgages that were pegged against the Euribor index which was the common standard for mortgages in Spain.
To give you an idea as to how disadvantaged a mortgage holder with a loan linked to IRPH has been compared to one linked to Euribor, the current IRPH rate is set at 1.81% which was last published in December 2019 and Euribor, for the same period was set at MINUS -0.311%.
The difference between indices of 2.121% is significant especially when reflected in the interest you pay on your monthly mortgage payments.
It is obvious that you would have had to pay more for a mortgage based on IRPH which could be deem very unfair.
Over the last 10 years, on average IRPH has been higher than this and many borrowers have struggled to keep up with the monthly payments in comparison to others who were linked to Euribor and many, sadly have had to throw the towel in and leave their properties for the bank to repossess.
If this has been the case, clients could still claim as a consequence of the higher payments placed on them by the bank forcing them to use the IRPH index.
There is an estimated 1 million mortgages that were signed pegged to the IRPH and if the European Court of Justice (ECJ) rules against the Spanish banks, Barclays estimate that lenders will have to refund a total of around 3.6 billion EUROS.
If you hold a mortgage that tracks IRPH or even if you cancelled one in the past 10 years and the ECJ rule in your favour, you could be in line for a substantial windfall.
Many IRPH clients are nervously waiting for the ECJ judgement in the hope that their mortgage, that they have been paying diligently over the last few years, could return them a nice lump sum plus interest for the all years overpayments they have been forced to make. It could turn out, for some, to be the best savings account they never had as interest payable could be set at around 4%.
At Fluent Finance Abroad we have a legal partners who have a number of cases already in court waiting for the 3rd March judgement so, if you do have an IRPH mortgage then we would like you to get in touch to see if you could potentially have a claim against your lender.
The information you should have to hand:
- Most recent mortgage receipt showing the interest rate you are currently paying
- Complete copy of the original mortgage deed you signed at notary.
It could not be more simple!
Fluent Finance Abroad is regulated by the bank of Spain under law 5/2019 and its advisers are fully qualified Spanish mortgage consultants (Intermediarios de credito inmobiliarios ICIs) and are best placed to give you formal and qualified Spanish mortgage advice.
