One million Spanish families with IRPH mortgages, waiting for the imminent ruling of the Supreme Court and hoping for a judicial precedent
He Supreme Court (TS) continues to delay the publication of the court ruling, which should be definitive in order to clearly determine the validity of mortgages referenced to IRPH (Mortgage Loan Reference Index)which in Spain They affect around one million contracts and whose cancellation could mean the loss of billions of euros for financial entities, between 16,000 and 44,000, according to estimates from various sources consulted.
The Spanish high court must rule after Last December, the Court of Justice of the European Union (CJEU) opened the door to annulment definitive of this index due to its lack of transparency. In his ruling he urged the Spanish judges to especially review whether the contract clearly included the details of the IRPH – especially regarding its calculation method and publication in the BOE – and whether it referred to Circular 5/1994 of the Bank of Spain, where the banking regulator warned that if loans became very expensive, a negative differential had to be applied to lower the fee.
The plenary session of the Supreme Court met last day 1 to discuss the matter but there is still no news about that meeting. The deliberation of the magistrates may take some time longer to result in a final ruling given the importance of the matter, although it usually does not take longer than this month.
Although the rulings on IRPH mortgages favorable to the interests of consumers have been given in different instances, there are an especially significant court ruling that sets a precedent never seen before in Spain to date. It was the one carried out last March by the Court of First Instance number 8 of San Sebastiánspecialized in abusive clauses. In its ruling, the court completely canceled a mortgage referenced to the IRPH, instead of replacing the index with another such as the Euribor and continuing with the loan.
The San Sebastian court establishes in its ruling that the clause referring to the IRPH in the case of the Kutxabank client “does not pass the transparency control”because, among others, “it does not include the complete definition” of this mortgage index or its calculation method, “it does not refer to a reliable address where they can be located” and “does not cite the relevant circular from the Bank of Spain that illustrates this matter”.
Historic ruling and full return with interest
In this way, for the first time in Spain, the right of the banking client to opt for total nullity of their mortgage is recognized and the existence of lack of transparency in the marketing of this mortgage index.
In practice it means that the plaintiff recovers all amounts and interest paid to the bankto whom you will only have to return the loan capital; That is to say: only the money requested for the purchase of the property, without the management, notary and additional taxes paid by the financial institution at the time.
Specifically, the ruling decrees the “radical nullity” of the contract and condemns the client to reimburse Kutxabank “the capital received on loan without adding any type of interest” and to the bank to reimburse “the amount of the monthly installments and expenses paid until now”increased with the corresponding interest.
The lawyers José María Erauskin and Maite Ruizfrom the Res office, which defended the affected consumer, in statements to the Efe agency, they have considered that the sentence reflects on paper most of the arguments that have been put forward “before countless judges and national courts” in numerous similar cases and that can serve as a precedent for other consumers.
What is the IRPH?
The IRPH is an official index recognized by the Bank of Spain. To calculate it, the average of the interests at which banks place their mortgages is taken. It is the second most used index in loans for the purchase of homes only behind the Euribor, whose calculation is linked to loans between banks.
In 2013, when the Euribor began its decline to values close to zero, the IRPH se remained stable at 2%. This meant an increase in the installments of the affected mortgages between 200 and 300 euros per month, according to affected platforms such as Asufin or IRPH Stop Gipuzkoa.
The different associations believe that there was a lack of information at the time of its marketing. “It is a misleading index for users because it is very difficult to understand such formulas neither its advantages nor its disadvantages and that it was fraudulently marketed. It was offered like floor clauses as a benefit for the consumer. It was said that they would be more protected and it has been proven false,” he assured. Manuel Pardospresident of the Association of Users of Cajas y Seguros Banks (Adicae).
