During this month we have attended the cancellation, by a Court of Madrid, of the mortgages of 40 banks and boxes for containing “abusive” and “little transparent” ground clauses. This situation is no longer completely unknown, since in 2013 the Supreme Court annulled these same limits. Now what does this situation mean? What is really a ground clause? Who can claim if your mortgage contains this type of clause? How much money has to be returned? Let’s see it in parts.
The ground clauses are born by the type of mortgages that exist in Spain. Most Spanish mortgages are subject to Euribor, that is, at the average interest rate paid by one bank to another to lend money. This interest rate is calculated from the data provided by the 24 main European banks and varies depending on the term to which the money is lent. You can talk like that about Euribor a week, a month or a year. The one-year Euribor is the one that is usually used as a reference to mortgages. The fluctuation of this type of interest is constant. Well, when they grant a loan, they demand a refund of the Euribor to which a differential is added. Thus, for example, if your mortgage is a loan to Euribor +2, it means that you will have to pay the bank the Euribor + two extra points.
To avoid constant fluctuations in the Euribor affecting the mortgage positively or negatively, in many of them the floor and ceiling clauses began to be included, according to which interest would not grow if the Euribor increased above (ceiling) and some ceilings under the which interests could never be reduced (ground).
How have these ground clauses affected?
As of 2008, the Euribor skyrocketed, exceeding 5%, which meant a criminal rise in many mortgages. Unfortunately, the ceiling clause was practically not applied because it was established on average by a 13% rise. That is, that the mortgages that would have had Euribor + 2 would have begun to pay 7%, still far from 13% of the ceiling clauses.
As of 2009, the situation was completely reversed: the Euribor plummeted, reaching 1%, but the Spaniards did not see their quotas fall. The reason? That the limitations were set at 3%, a very easy percentage to reach compared to that 13% of the ceiling practically impossible.
When thousands of mortgaged people verified that their mortgages were not going down, people began to become aware of the existence of the floor and ceiling clauses in their mortgages and of the abusive differences between them. In this way the complaints began and those affected began to be grouped through offices and associations.
In 2013, the Supreme Court declared null and void the clauses of the “not very transparent” contracts of several entities, until April 2016, where the last sentence declared null and void all the clauses of the mortgages, which affected 40 entities and savings banks, thanks to the macro demand of 15,000 affected people organized through Adicae.
Do you still have ground clause?
As a result of all these demands, there are many financial institutions that have negotiated at a particular level with their clients to eliminate this section of their mortgages, but there are still many individuals who still have not resolved this issue.
Adicae has been very sharp in this regard and has recommended to all those affected to stop paying these percentages immediately and to go to their banks to request their cancellation.
In addition, although the judgment affects the banks and entities in which the 15,000 claimants were located (a total of 41), all those affected by these clauses will be able to take advantage of the decision.