28 Nov, 2015 @ 11:18
1 min read

Getting the clause out!

Tancrede de Pola

MORTGAGE holders are celebrating in their droves… and about time too.

Tancrede de Pola
Tancrede de Pola

With around 10% of Spanish mortgage holders affected by a hidden interest fee known as clausulas suelos, it is welcome relief to see the European Commission ordering banks to reimburse customers in full.

Estimated to be responsible for a whopping 90% of Spanish housing evictions, the minimum-rate interest clause has been costing mortgage holders an average of €3,000 a year for far too long.

But that – at last – looks to be coming to an end and good riddance too.

Not only have the clauses now been taken out of most – if not all – mortgages in Spain, but those who have forked out thousands of euros of their hard earned cash should now see a big payback.

The logistics of the payback are yet to be ironed out, nor have the banks come out and responded to the order… therefore it could be a while yet before reimbursements start coming through.

To give a little background, the clausulas suelos saga reared its head in the mid 2000s, with thousands of customers complaining that they were being tricked into paying thousands of euros on top of their mortgage repayments.

It soon emerged that, unbeknown to many mortgage buyers up and down the country, banks had hidden the clausulas suelos minimum interest fee in the small print.

By May 2013, the Supreme Court ruled that the fee had not been outlined efficiently in mortgage contracts. Banks were ordered to remove clausulas suelos from all contracts where they were not outlined clearly and to repay any fees paid from that date on.

In October this year, Caixabank finally removed all its minimum-rate clauses, effectively losing the bank a staggering €220 million each year.

But the European Commision have now ruled that those sanctions do not go far enough. They have ordered banks to dip into their coffers one more and reimburse mortgage borrowers in full from the date they started repaying.

All in all, it will cost the banks a fair amount but will go some way to restoring confidence in the mortgage system.

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