Spanish Mortgages – Floor Clause, “Clausula Suelo”

Do you have a Mortgage on your Spanish property? You could be entitled to a refund of thousands of Euros.

Following a judgment of the European Court of Justice on 22nd December 2016 you may be able to claim compensation from your bank if you have a mortgage containing an unlawful “floor clause”.

What is a floor clause?

Many Spanish tracker mortgages were linked to a variable interest rate such as the European Borrowing Rate (Euribor).

A lot of these mortgages had a floor clause which meant that even if (as it did) the official interest rate the mortgage was tracking dropped to a very low level, the customer’s mortgage was stuck at a minimum rate ‘the floor rate’ that was higher. This meant people were, and in some instances still are, paying much more than they should have been.

The law

In May 2013, Spain’s Supreme Court ruled that mortgages of this type provided by BBVA, Cajamar and NCG were “abusive” but banks were not initially ordered to refund customers.

In April 2016 a Madrid judge went further and decreed that 40 of Spain’s biggest lenders had to pay back borrowers the extra interest paid on mortgages dating back to 2013.

The more recent ruling in December 2016 by the European Court of Justice ordered that there should not be a time limit on how far back you can claim and banks should pay back all of the interest you overpaid.