“The mortgage ‘floor clauses’ are a fraud.”
Thursday, April 7, 2016, could go down in history as a great day for Spanish mortgage holders and a very grim one for many Spanish banks, thanks to a new ruling that the so-called mortgage floor-clauses that were unleashed across the whole financial sector in 2009 are abusive (but not illegal) and lack transparency.
These floor clauses set a minimum interest rate — typically of between 3% and 4.5% — for variable-rate mortgages, even if the Euribor drops far below that figure. In other words, the mortgages are only really variable in one direction: upwards!
Following the latest ruling, the banks named in the suit must reimburse clients all the money they’ve surreptitiously overcharged them since May 2013. And if they want to continue applying floor clauses in the future, the banks must do so in an open and transparent manner, which pretty much defeats the…
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