To begin with, we’ll explain what the term IRPH means. Basically, the acronym stands for Mortgage Loan Reference Index. This clause pertains to home purchases with a term of three years or more. These loans are currently regulated by the Bank of Spain.
This mortgage is calculated based on the estimated interest rates that financial institutions currently apply to Spanish mortgages. That is why we recommend that you review the terms of your mortgage contract to determine whether the IRPH applies to your case. There are over one million mortgages in the country that include this clause.
The reality is that the IRPH is known for having fairly high rates, which has led to a great deal of criticism from Spaniards affected by it. The issue has even reached the Court of Justice of the European Union (also known as the CJEU).
The drawbacks and issues with this clause
In this section, we’ll discuss the drawbacks and issues associated with the IRPH. To begin with, we’ll revisit the previously mentioned issue this clause had with the CJEU and explore it in greater detail.
This Spanish mortgage crisis came to light thanks to the Euribor rates. In general terms, the Euribor is a daily benchmark rate that reflects the interest rates at which European banks lend to third parties and to each other. The currency used in this index is the euro.
Therefore, it was in this index that the country’s problems with the IRPH were reflected. Since these loans are much more expensive than those based on the Euribor, with interest rates ranging from 1.1% to 3.1%, they are significantly higher. This caused a great deal of controversy, and many Spaniards complained about this situation and filed complaints.
The complaints all alleged that the banks were exploiting these interest rates and that each bank was charging whatever rates it wanted. The case eventually reached the Supreme Court in 2017, where the ruling went in favor of the banks, and it was determined that the rates they charged were not exploitative.
How can I tell if my IRPH is predatory or not?
If you're concerned that you're being charged high interest rates on your mortgage, keep in mind that for these rates to be considered abusive, the index must exceed 1 %. If this is the case for you, here are some tips that may help you file a claim:
- First, you should carefully review the terms of your mortgage loan.
- Please contact the customer service department of the bank where you took out the loan.
- If the bank does not respond or you encounter any problems, contact the Bank of Spain.
- If the problem persists and they do not offer a solution, we ultimately recommend that you file a civil lawsuit.
- You can find the IRPH claim form on various legal websites.
We hope this information has been useful to you. If you have any issue with this mortgage clause or if you have any problem with your mortgage, we recommend that you contact us for any real estate problem you may have.
