What is the IRPH of mortgages and why, in some cases, the courts could consider it abusive

He Supreme Court has decided that It is not possible to provide a “unique” solution to mortgages affected by the IRPH or Mortgage Loan Reference Index. This after delaying its ruling and keeping more than a million families in suspense who accessed mortgages with this index that has been the subject of controversy for years due to its alleged lack of transparency.

According to estimates by analysts and consumer associations, the cancellation of the IRPH could cost banks between 16,000 and 44,000 million euros, which would represent one of the largest judicial setbacks in the recent history of the Spanish financial system. Therefore, the high court has made it clear that its “Abusiveness” will depend on the specific circumstances of each loan.

The delay in the sentence comes after the Court of Justice of the European Union (CJEU) ruled in December that the IRPH could be considered abusive if its operation was not clearly explained to the consumer. The European court urged Spanish judges to examine the transparency of contracts on a case-by-case basis, especially if they detailed the method of calculating the index and if Circular 5/1994 of the Bank of Spain was mentioned.

What is the IRPH?

He IRPH It is an index endorsed by the Bank of Spain. It was created with the objective of offering a alternative to Euriborwhich until then was the main reference index for these loans.

It has been in operation since 1994 and, officially, The IRPH is called the “average rate of mortgage loans.” for more than three years to acquire free housing.”

Now, in 2013, when the Euribor collapsed due to the monetary policy of lowering interest rates of Mario Dragui, then president of the European Central Bank (ECB)the European index touched 0.5%, while the Spanish one did not drop below 3%. This made the mortgage referenced by the IRPH had a cost 150 euros higher than the average.

In response, consumer associations denounced and assured that The conditions linked to the mortgages referenced by the IRPH were not clear; For this reason, the Court of Justice of the EU (CJEU) had to intervene.

What have the courts said about the IPRH?

In 2020, The Court of Justice of the EU (CJEU) endorsed the legality of the IPRHbut recalled that it was the Spanish courts who had the jurisdiction to determine if the IRPH was marketed with a lack of transparencyand to order the replacement by another applicable legal index that would protect consumers.

In December 2024, the Court of Justice of the European Union (CJEU) admitted the possibility that a clause on the Mortgage Loan Reference Index (IRPH) could be considered abusive and as a consequence annulled due to lack of transparency, thus giving hope to the claims of a million mortgage holders.

Who could claim that an IRPH is considered abusive?

The Supreme Court in the civil court has ruled that the indicator will be considered abusive if the entity did not transparently inform the consumer. For this purpose has established a series of guidelines in order to guide the courts that must resolve this type of litigation. First of all, he points out that an average consumer must be able to understand the operation specific method of calculating the IRPH plus the differential.

Likewise, you must be able to evaluate, with “precise and intelligible criteria”the economic consequences that the application of the IRPH may have on your financial obligations. Also, it will be necessary to check if the loan in question is subject to Law, in accordance with the relevant orders and circulars, or to the regulations on general conditions of contracting and consumption (loans that, due to their date or amount, were outside the scope of application of the Order of May 5, 1994)

Finally, it must be verified that the entity delivered the informative prospectus provided for in the order itself and also verify the negative differential referred to in Circular 5/1994 of the Bank of Spain.