The IRPH is an indicator used to determine the cost of mortgage payments. In recent months its legality has been questioned. European justice: each Spanish court, each judge, must determine whether or not the contract analyzed in question is abusive.
Today the Supreme Court has confirmed the lack of transparency in the marketing of mortgages linked to the IRPH.
The EU Advocate General had already made it known last September, although he left the controversy open. On the one hand, he assured that the IRPH mortgage marketed by Bankia (a specific case being studied by the CJEU) was marketed with transparency, but on the other, he assured that it is the Spanish judges who must look at transparency in contracts on a case-by-case basis. However, his position is not binding and it was the court ruling that was published on Tuesday that should indicate the future of these loans. But why do mortgages with IRPH put the future of some banks against the ropes?
What is the IRPH?
It is a variable index that began to be applied to mortgage loans in 1994, instead of the Euribor. Its calculation is the average rate of loans for the acquisition of housing for more than three years and is supervised by the Bank of Spain. It is the second most used indicator in these credits and it was put into circulation due to the need for a new reference to protect clients from fluctuations in the financial markets that existed at that time, since it is more stable. In fact, it is less volatile than the Euribor. In its elaboration the Euribor is incorporated plus a differential of variable mortgages, although its rate is slightly higher. It is currently trading at 1.836%.
Why do doubts arise about its legality or abuse of the bank in its use?
The problem began in 2013, when the Euribor began to collapse and approached negative levels, while the IRPH settled at values close to 2%. Mortgage customers with this indicator begin to complain when they consider it abusive. Despite the fact that by considering this index valid in 2017, in 2018 a court in Barcelona decided to refer the matter for a preliminary ruling to the European Court. The bank defends that in the price comparison it is necessary to take into account the differentials that are applied in mortgages with Euribor and that the rate variation is “very insignificant”.
How much money is at stake?
Since December of last year, several analysis houses have given various figures of the blow that a negative sentence could deal to the bank in returns to customers. At the moment, the largest amount has been estimated by the DBRS agency, which points out that entities could have to return up to 45,400 million euros in the worst case scenario, that is, that retroactivity is opened and that all clients, even those who have already amortized their mortgage, claim. , Morgan Stanley estimated the impact between 3,000 and 7,000 million euros, while Barclays set it at 3,600 million. For its part, the Association of financial users (Asufin) calculates the blow could rise to 25,000 million euros.
What exposure has the bank recognized?
CaixaBank is the entity that currently has the most exposure to IRPH mortgages. It has loans of this type on its balance sheet with a nominal value of 5,670 million. , for its part, has 3,200 million; , 2,800 million; , 1,200 million; , just over 700 million; , about 200 million and , 155 million. This recognized exposure could raise the cost of claims to twice your exposure, .
How many customers would a ruling against affect?
Various user associations estimate that in Spain there are currently more than one million customers with mortgages referenced to the IRPH. However, until the CJEU ruling is known and, if it opens the door to returns, it is unknown how many customers will be able to demand compensation. It will be the court that establishes from what date the claim can be made and if those customers who have already repaid the mortgage can also do so.
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