Mortgage blow for Spanish banks

BRUSSELS gave the thumbs down to the mortgage conditions imposed by Spanish banks.

This could open the door to multimillion claims from roughly one million Spanish homeowners, finance experts calculate.

The European Court of Justice’s (ECJ) Attorney General declared that the Mortgage Loan Index (IRPH) cannot be excluded from the EU directives on abusive mortgage clauses.

The Spanish IRPH should be subject to judicial control owing to its “potentially abusive character”, Brussels said.

Banks in Spain, with the backing of the government, have in the past argued that the official character of the IRP made it “impossible” to use it abusively.

In 2017 Spain’s Supreme Court ruled in favour of the banks on the grounds that the IRPH is not an essential clause in a mortgage contract. It is an official index “defined, fixed, calculated and supervised by the Bank of Spain.”

Because the IRPH is published in the Official State Bulletin (BOE) the index should be excluded from EU directives, the Supreme Court argued.

The EU ruling from the European Court of Justice is not binding although as a rule, the ECJ judges tend to follow the Attorney General’s recommendations, court sources said.