Spanish Banks Must Contact All Customers Affected by the Mortgage Floor Clause Rate and Return Money
Spain has passed a decree to help mortgage buyers get their money back from “abusive” mortgage floor clauses. The decree, announced by the Government after a cabinet meeting, followed a ruling from the European Court of Justice in December, which ordered Spanish banks to hand back their clients all the money they made on “unfair” mortgage floor clauses.
The mortgage floor clauses impose a minimum interest rate on floating-rate mortgages by establishing a limit on how far mortgage rates could fall in accordance with the benchmark rate.
In reality, however, Spanish mortgage buyers did not profit fully from the record-low interest rate environment in recent years under the floor clauses.
Finance Minister, Luis de Guindos, said that the decree was to prevent Spanish courts from being flooded with lawsuits. He also said the decree would help citizens to have their money back through an extrajudicial mechanism that was free.
The procedure orders that Spanish banks must contact their clients to inform them if they are affected by abusive mortgage floor clauses and then, offer an agreement within three months. If there is no agreement, customers can file a lawsuit in order to have their money back, which in principle would be returned in cash.