Recent ECJ concerning the mortgage loan reference index (known as “IRPH”) considering opportunity for requesting the nullity of such interest rate contained in a vast majority of mortgage deeds in Spain. Clause not transparent for a consumer as the said interest is based on the average rate of mortgage loans granted by Banks as opposed to the Euribor rate. The effects of nullity leave door open to the possibility for claiming interests since formation of contract or time barrier determined by courts.
Possibility to Claim Interest
The General Advocate´s opinion issued recently in Case C-125/18 (“Marc Gómez del Moral Gual vs Bankia”) about the mortgage loan reference index (known as “IRPH”) opens the door to possible claims in order to request the nullity of such interest rate contained in a vast majority of mortgage agreements in Spain.
Despite this opinion seems favourable for consumers, we will need to wait until the European Court of Justice issues its final decision, which will be probably be by the end of this year.
This kind of clause affects to those borrowers/consumers in which the interest rate stated in their loan/mortgage agreement is linked to the mortgage loan reference index and not to Euribor.
Euribor index has experienced lower rates over the past years which has been favourable to consumers on the contrary the IRPH rate has not decreased staying higher than the Euribor, and therefore, consumers affected by the IRPH have paid higher monthly instalments than those who had Euribor.
The key points of this controversy will be similar to those examined for the mortgage collar clauses, which are whether the professional (bank) informed properly the consumer whether the mecanism to calculate the rate of IRPH is truthful, and made understandable the how the IRPH clause works, this is with transparency and clarity.
The General Advocate added that the Banks had to inform consumers the implications of such clause in accordance with the European Directive 93/13 and lets the consumer know the evolution of such reference rate in the past, as it is calculated on the basis of the average rate of mortgage loans granted by Banks as opposed to the Euribor rate.
He also considers that IRPH rates are not excluded from the scope of application of the European Directive 93/13, as opposed to local Spanish courts, as it is one of the six official kind of legal interest that exists for granting mortgages and loans
Finally, he concludes that local courts have to carry out a review on the transparency of the clause, and check, in accordance with all the circumstances surrounding the signing of the loan agreement, on the one hand, whether the contract sets out in a transparent way, the method of calculating the interest rate, so that the consumer was in a position to know the impact of such rate, on the basis of a clear and intelligible criteria, the economic consequences which derived for him and, on the other hand, whether that contract complies with all the information requirements under national laws.
It will also be interesting, in case the ECJ considers that this rate is not transparent and that the consumer was not properly informed whether the nullity affects the contract since its signing or whether they will state a time barrier for claiming the amounts unduly paid.
A factor that you should bear in mind in case of a possible claim against the bank is the wording of the mortgage loan reference index stated in your mortgage agreement as it will be different from one bank to the other and therefore limit your claim´s range.
Having said that, it could be possible that banks could reach an extrajudicial agreement with their clients and therefore change the IRPH index for a fix rate or Euribor rate. The possible existence of such procedure would not avoid the consumers to take legal actions against banks, specially those who consider that their bank is not making a fair offer for the surplus interests paid or refuses their request.
If you wish Scudamore Law can help you to analyse what is your situation and amount of interest you would be entitled to claim to your bank.