The Spanish Supreme Court has recently confirmed three sentences on the mortgage loan index. The decision validates the previous jurisdiction from the European Court of Justice (ECJ) and rules that the IRPH Index cannot be decisive in confirming whether a clause is abusive.
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Confirmation on sentences on IRPH
The three judgements issued in late January reiterate the validity of three previous sentences. All three concern the Spanish Mortgage Loan Reference Index (Indice de Referencia de Préstamos Hipotecarios/ IRPH).
The Index, compiled by the Bank of Spain, has been in use since 1994 to calculate simple averages for mortgage loan interest rates. It is used for loans for at least three years issued by banks in Spain.
The IRPH has already been subject to extensive court activity in Spain and at the ECJ. The latest responds to three specific questions raised by courts in Spain.
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Transparency parameters
The ECJ has confirmed that if a court in Spain finds a lack of transparency in clauses concerning the IRPH Index in a mortgage contract, the court must next decide whether the clauses are “abusive”. In other words, the court must determine if the clause acts against the consumer and as a result, gives them fewer rights than the bank.
The ECJ established two transparency parameters:
Firstly, the IRPH be published in the National Bulletin (BOE). Its publication allows consumers to consult the Index and find information about differentials and how it is calculated.
Secondly, the Spanish bank issuing the mortgage loan provides the consumer with information on the past performance of the Index.
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Decision on abusive clause
However, even if the court finds that the consumer did not receive sufficient information about the IRPH Index, the case must still determine if the clause is abusive.
It’s generally agreed that the IRPH Index is the most appropriate reference for mortgage interest rates. Indeed, court sentences have ruled in favour of its suitability in the past.
In addition, the ECJ has previously ruled that banks do not have an obligation to provide consumers with comparative information from different indices. Nor can the past performance, good or bad, of the IRPH Index have any influence on the imbalance between the consumer and the bank’s rights.
Even if the loan becomes more expensive than others over the years, this does not imply a determining imbalance of abusiveness because control of content cannot lead to a control of prices.
As a result, even if the IRPH clause is not as transparent as it should be, it cannot, therefore, be considered abusive.
Problems with abusive clauses in mortgages
As followers of this blog well know, mortgage loans in Spain are infamous for containing abusive clauses. Although new regulations and jurisdiction have improved the situation over the last few years, there are still thousands of loan contracts that contain non-transparent clauses, directly affecting the loanee’s interests.
At Costaluz Lawyers, we are pioneers in fighting against abusive clauses and winning landmark cases for our clients. If you believe your mortgage contract contains a clause that means your rights are not balanced with those of the bank, get in touch now.
Maria Luisa Castro
