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More and more people realize that they have a floor clause in their homes and decide to claim it from their bank. This decision took on special relevance since last December the Court of Justice of the European Union (CJEU) issued the ruling that said that the amounts collected in mortgage contracts since 2009, when these clauses began to be incorporated, had to be returned.
As the vast majority of Spanish mortgages are in line with the Euribor -a fluctuating rate-, the banks decided to incorporate the floor clause that would allow the interest not to fall below a minimum, even if the Euribor to which the mortgages referred did. .
Consulting a floor clause calculator is a fundamental step to avoid complications when claiming the floor clause from the bank. It allows knowing in advance the amount that can be claimed from the entity.
There is the possibility of calculating it through the calculator of the floor clause of the Organization of Consumers and Users (OCU), in which the amount can be detailed by entering some data: initial capital, date of signing of the mortgage contract, applicable differential or initial interest rate, among others.
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Spanish banks are again in the crosshairs of another scandal. The Supreme Court has given them until July 31, 2013 to review the floor clauses of their mortgage loan contracts to assess whether or not they meet the transparency requirements. If the result is negative, the clause must be removed entirely.
As you know, a mortgage loan is made up of capital and interest that are returned to the bank in monthly installments. Depending on the type of loan contracted, the interest rate may vary, increasing or decreasing depending on the case, but the "floor clause" determines a minimum interest rate that would apply throughout the life of the mortgage. The floor clause was introduced by the banks to compensate for the economic losses that they could suffer due to variable interest rates and many applied a floor clause of around 3,55% (or more) so that when the Euribor reached historical lows , many did not benefit from it because the floor rate determined in their contract was higher.
Just as there is an established minimum rate, there is also a maximum, which in many cases is set at 12%, which the Supreme Court has also considered abusive because even when the interest rate was at its maximum, it did not exceed 5,5%. very far from the 12% ceiling that many banks applied.
The Constitution line by line: Article I, Section 2
A floor clause (or "floor clause" in Spanish), normally introduced in a financial agreement in relation to a maximum limit or a minimum interest rate, refers to a specific condition generally included in financial contracts, mainly in loans.
As a loan can be agreed on the basis of a fixed or variable interest rate, loans agreed with variable rates are usually linked to an official interest rate (in the United Kingdom LIBOR, in Spain EURIBOR) plus an extra amount (known as as spread or margin).
Since the parties will want to have some certainty about the amounts actually paid and received in the event of sharp and sudden movements in the benchmark, they can, and usually do, agree on a system whereby they are sure that payments will not be too low. (by the bank, so that it has a certain and regular benefit) nor too high (by the borrower, so that the payments remain at an affordable level throughout the term of the mortgage).
However, in Spain, for about a decade, the original scheme has been corrupted to the point that it has been necessary for the Spanish Supreme Court to issue a ruling to protect consumers / mortgagees from the constant abuses that banks inflict on them. .
Apostrophe S – Possessive Nouns in English
Today the long-awaited judgment of the Court of Justice of the European Communities (ECJ) on the floor clauses of interest rates in Spain (the "judgment") has been published. The CJEU confirms that the floor clauses are null because they prevent clients from fully benefiting from a drop in the reference interest rates, but this had already been declared by the Spanish Supreme Court in 2013. The key to the Judgment is that it annuls the ruling of the Spanish Supreme Court that had limited the liabilities of banks going back from 2013. The CJEU establishes that Spanish banks have to return to customers more than what they had lost since May 2013. For Spanish banks, this represents a liability potential that has been calculated by analysts between 3.000 and 7.000 million euros.
Since the right arises from the nullity of a clause considered abusive, the claims will not prescribe and may be exercised at any time. The existence of a floor clause applied before 2013 may also be used as an argument to suspend the execution of certain mortgages. In the latter case, the affected consumer will not need to expressly allege the existence of the clause, the court is empowered to suspend the procedure by itself.
