Have your Bank been charging you more than they should for your mortgage?. Time to revenge its coming ...

From 2013 the spanish courts have been repeteadly considering null and void the mortgage floor clauses. You can see our note on our blog in 2013. This clauses were designed to protect banks from negative interest rates.

http://javierherrerallamas.blogspot.com.es/2013/10/mortgage-floor-interest-abolished-take.html

Last week a Spanish court ruled that the country's banks leaders can no longer sell mortgages with so-called floor clauses. All main banks are involved, including Caixabank, Barclays, Bankia, and Banco Santander. Caixabank and Bankia.

The court said banks had to repay customers what they had lost since May 2013, when Spain's Supreme Court declared these mortgages, whose rates cannot fall below a benchmark, were invalid if they had not been presented clearly. This means the ruling is only retrospective to May 2013.

This ruling by a local court in Madrid followed class action suits by customers alleging that banks had not properly explained the clauses to them, which prevented them from benefiting from the euro zone's record low interest rates.

Most of the estimated 4m mortgages affected were sold during the 1997-2007 property boom when buyers were paying top prices for their homes. When the bubble burst they were unable to benefit from falling interest rates.

It is estimated that those affected pay from €179 (Euribor +0.5%) to €213 (Euribor +1%) more on a €150,000 mortgage than they would if they didn’t have a fixed minimum rate mortgage.

As the recession set in and people were unable to meet their mortgage repayments, they were evicted in growing numbers, peaking at an average of 500 a day in 2012. Under Spanish law homeowners cannot claim bankruptcy over a mortgage as it is regarded as personal debt.

So even after the banks foreclose and repossess a property the former owner still has to pay off the mortgage, as well as associated legal charges.

Some Spanish banks  have already removed the mortgage floor . Since the third quarter of 2015, Caixabank has eliminated most of its mortgage floor clauses. Banco Sabadell, the fifth-largest in Spain which has so far refused to get rid of the clauses, said they would analyse the ruling and take a decision later.

Banks including Barclays and Santander face a €5bn (£4bn) bill after a Spanish court ruled that millions of fixed minimum rate mortgages were null and void because of the “lack of transparency” in the way they were sold during the property boom.

Last October the European Commission asked Spanish banks to remove the clauses and even repay customers over the whole life of the loan, beyond the May 2013 limit. The European court in Strasbourg is expected to rule on 26 April whether the banks’ liability should extend beyond that date. The European commission has already said it believes the payments should be backdated to the date the mortgage was signed, on the grounds that if a clause is declared null, it’s null from the beginning.

So, it is clearly time to press your bank to get some of your money back. 

Javier Herrera Llamas