Everything you need to know about the IRPH
What is the IRPH?
The IRPH is an index used by banking entities, and especially by the old Savings Banks, to establish the calculation of interest on mortgage loans. Specifically, the IRPH index is equivalent to the average interest rate offered by banks and savings banks in the last 3 years. The figure was obtained by the Bank of Spain and published in the Official State Gazette.
The use of the IRPH index became more popular in the initial years of the economic crisis of the last decade (2007 – 2009), when the EURIBOR (the most common index for calculating variable interest) set very high rates. This circumstance allowed many financial institutions to market their loans with the IRPH index, apparently more beneficial to their clients than the EURIBOR. The IRPH was less volatile than the EURIBOR, which had suffered large variations in previous years, and maintained a more stable value.
In later years the EURIBOR fell significantly in value, and consequently so did the interest paid by those consumers whose loans were referenced to the EURIBOR. But the same did not happen with the IRPH, which maintained higher interest rates. As a result, consumers with mortgage loans referenced to the IRPH index have been paying much higher interest rates.
The use of the IRPH was under suspicion from the start. Subsequently, some courts began to declare it invalid due to lack of transparency and the Bank of Spain stopped publishing the data in November 2013.
The European courts induce the Spanish courts to declare the invalidity of the IRPH index for lack of transparency, although the path has not been easy.
The IRPH has been questioned for years. The first claims made denounced that it was an index that could be manipulated by the banking entities, since they were the ones who provided the necessary calculation information to obtain the figure.
The sentences of the Spanish courts were disparate, while some maintained that the IRPH was void due to abusiveness, others declared its validity and maintained the validity of the loans with reference to said index.
On December 14, 2017, the Supreme Court ruled on the matter to unify the criteria of the rest of the lower courts, considering that it was not an abusive clause. Surprisingly, the Supreme Court assured that it was not the bank’s obligation to report the different rates to calculate interest, nor the difference between the EURIBOR and the IRPH.
In that sentence, two magistrates made a dissenting vote because they disagreed with the rest of the magistrates, considering that the IRPH is a complex index that required information from the bank to understand its economic importance in the monthly payment of the loan installments during the duration of the contract.
Luckily for all those affected, the recent ruling of March 3, 2020 of the European Court of Justice determines that credit institutions were obliged to inform consumers of what had been the evolution of the IRPH of the savings banks during the two calendar years prior to the execution of the loan contracts and the last value available.
In order for the consumer to be able to understand the specific operation of the method of calculating the aforementioned interest rate. When the bank cannot prove that it has correctly informed the consumer, the IRPH clause must be declared null and void due to abusiveness. We carefully analyze the consequences of this ruling in our article The CJUE Ruling on the IRPH in depth.
If you want more information about the evolution of the criteria applied in Spain, we recommend our article The evolution of the IRPH by the Spanish courts. u>
Situation for those affected
It is expected that in Spain there will be more than a million mortgage loans referenced to the IRPH index, a very large volume of people affected. All of them have been paying much higher interest rates in recent years compared to other mortgage loans.
Following the ruling of the European Court of Justice, the opportunity is opened for all those affected to recover the amounts improperly charged by the bank, and at the same time the banks must reduce the amounts collected in the monthly mortgage bills.
If the bank refuses to do so, we can go to court.
How do I find out if I am among those affected?
The study to find out if our mortgage loan is referenced to the IRPH is simple. It is enough to analyze the mortgage loan deed and check the index on which our bank calculates the interest. This is information that must necessarily be included in the mortgage loan contract.
However, at JLCASAJUANA we offer this study free of charge and without obligation for all those affected by the IRPH, so that you can send us the deed of the mortgage loan if you want our team of lawyers to analyze it for you. We will be happy to give you an immediate response and inform you of your rights if you are one of those affected.
What is the solution if I am affected?
The solution is to file a legal claim that pursues a triple objective:
- Obtain from the courts a declaration of nullity of the clause contained in our mortgage loan contract. The nullity of this clause does not imply the termination of the loan nor does it affect the contract itself. The mortgage loan will remain in force, although the monthly installments will collect a lower amount of interest thereafter.
- Get the return of the interest improperly charged by the bank by making use of a clause that has been considered abusive for years.
- Reduce the cost of the remaining interest payable until the end of the mortgage loan.
Prior to the presentation of the appropriate judicial claim, we will send a prior request to the bank requesting the suppression of the clause that contains the IRPH for being abusive. Predictably, the banks will continue to deny this right to those affected, seeing the need to go to court.
When can I claim?
The claim to obtain the declaration of nullity and return of excessive interest can be made at any time. They do not prescribe the rights of consumers affected by an abusive clause, and therefore do not negatively affect the age of the loan. Conversely, the older it is, the more amount the affected party must collect.
They can also claim those affected whose mortgage loan has already concluded.
The bank must return the amounts duly received, and also, the interest accrued from the date on which the installments with excessive amounts were paid.
Start the procedures to claim
If you are affected, please contact us. We are a firm with more than 40 years of history, which studies each case individually. We are not a massive claim platform, our lawyers have extensive experience and we offer you the chance to get to know us personally if you wish.
It may interest you:”Nullity of the IRPH clause in mortgages ”