Mortgage floor levels abolished ?

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lizzie
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Mortgage floor levels abolished ?

Postby lizzie » Sat Jul 06, 2013 11:54 am

Apologies if this has already been dealt with, but can anyone throw any additional light on the subject please, particularly if they are now paying less :clap: I found this on another forum this week. My payments certainly haven't altered :thumbdown:



Friday, 22 March 2013 13:59

High court slams mortgage abusive clause
THE High Court has backed the appeal of the association of bank customers Ausbanc and has ruled that the controversial 'claúsula suelo' clause is abusive if the mortgage holders were not properly informed or the contract was not clear enough. The 'bottom' clause means the mortgage holder has to pay a minimum interest rate regardless of how much the Euribor - the most common variable rate used by Spanish banks - falls. According to Ausbanc, the clause was used by banks, savings banks, and banking cooperatives - including BBVA, Banco Sabadell, Caja Extremadura-Liberbank, Unicaja, Caja Rural del Sur, Cajamar and Nova Caixa Galicia - and it involved minimum interest rates of between 2.5%-4%

Generally Caja rural de Granada has 4% floor clauses

Mortgage “floors” abolished by Supreme Court
Posted on June 15, 2013 by David — 2 Comments ↓

The Supreme Court has ruled that mortgage”floors” are illegal and must be removed from all mortgages, unless they are an integral part of a complex financial package. Millions of people with a mortgage in Spain taken out in the last couple of decades look to see their monthly payments drop substantially!

The idea with mortgage floors is that the amount of interest on your mortgage can never drop below a certain amount.

Lets say you have a standard Euribor tracking mortgage. If the Euribor (European interbank lending rate) goes up, you pay more on the mortgage. And vice versa. But if you have a floor on your mortgage, it doesn´t matter how low Euribor goes, your mortgage rate will never go lower than the floor.

Meaning a lot of people are stuck paying between 2% and 3% at the mo, despite Euribor dropping to about 0,8%. The banks just won´t drop further.

Anyway, after the ruling, Cajamar and BBVA have announced they will implement the ruling at once, dropping the interest rate as from the 1st of June.

El Cid
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Re: Mortgage floor levels abolished ?

Postby El Cid » Sat Jul 06, 2013 1:28 pm

It all depends on what type of mortgage you have.

If it is linked to the Euribor rate directly then it will probably go down as the "floor" is typically between 3 and 4% where Euribor is now about 0.5%.

However many banks use a different type of rate as their reference. The Bank of Spain publishes all the rates and there is one that is based on the typical interest rates actually used by banks when they lend money for houses and this is not linked to Euribor.

For example, the reference rate at the moment is 3.149 and a bank will typically charge an extra 0.5% on top of that making it 3.649%.

So, in these cases the new rules will make almost no difference.

Sid

lizzie
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Re: Mortgage floor levels abolished ?

Postby lizzie » Sat Jul 06, 2013 1:41 pm

Oh bu**er ! Still , it's worth an enquiry, or do you think any due reduction would just be applied automatically ?

El Cid
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Re: Mortgage floor levels abolished ?

Postby El Cid » Sat Jul 06, 2013 1:48 pm

It will most likely depend on the individual bank.

One thing is for sure, they won't be rushing to change anything if it's going to cost them money.

Sid

lizzie
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Re: Mortgage floor levels abolished ?

Postby lizzie » Sat Jul 06, 2013 1:56 pm

Thank you Sid

pete_l
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Re: Mortgage floor levels abolished ?

Postby pete_l » Sat Jul 06, 2013 6:45 pm

Presumably this is all merely a gesture. If the courts make lower limits to tracker mortgages illegal, the banks will simply stop offering tracker mortgages.
Banks employ much cleverer people than the legal system does, so they are bound to find a way to keep the profits at the required level and the legal system will always be playing catch-up (if they can be bothered) to plug the most egregious abuses.

El Cid
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Re: Mortgage floor levels abolished ?

Postby El Cid » Sat Jul 06, 2013 6:56 pm

I'm sure you are right for new offerings but what about existing mortgages?

To change the terms and conditions would require a new escritura and re registration with the land registry.

That will involve significant costs which could offset the savings. Also the bank could treat it as a new contract and charge you to cancel the original contract - typically 1% of the loan.

I really can't see the banks taking this lying down!

Sid

pete_l
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Re: Mortgage floor levels abolished ?

Postby pete_l » Sat Jul 06, 2013 7:33 pm

El Cid wrote:I'm sure you are right for new offerings but what about existing mortgages?

Yes that's the key. I'm a little out of touch, since I paid off my mortgage 10-ish years ago. But it's my understanding that trackers are taken out for a fixed (short 1 - 5 years) period of time. After that the mortgagee renegotiates the terms, or switches to a different mortgage with a different bank.
So I'm sure you're right: this will benefit people until the term of their existing trackers expire (but question: how many people in Spain have taken out mortgages in the past few years?) and then they'll find that all the new offerings have morphed into something less flexible - although not necessarily cheaper or more expensive.

P.S. it wouldn't surprise me if it was revealed that this only became law at this time, with the recovery about to bloom, because the banks "let it", by stopping their resistance and lobbying.

Ian C
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Re: Mortgage floor levels abolished ?

Postby Ian C » Sat Jan 31, 2015 5:48 pm

I was in the Malaga courts this week, first hearing to have my floor clause removed while waiting for the trial. The trial date has been set for November 2016 and Unicaja are obviously against the clause being removed before the trial.
It is crazy that we have to continue paying €300 monthly over the top while awaiting the trial. It is clear that the banks are in the wrong here and unicaja are just playing for time.
My mortgage was a developer subrogation and there is not even a floor clause in my deeds, however, because unicaja say that it existed in the deed between the developer and bank, then it passes to me. How is that for abusive or transparency

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avellana
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Re: Mortgage floor levels abolished ?

Postby avellana » Thu Feb 05, 2015 11:04 pm

I've sent you a PM

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elizabennett
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Re: Mortgage floor levels abolished

Postby elizabennett » Wed Apr 27, 2016 5:37 pm

I read on several Spanish newspapers about the Supreme Court's ruling on floor clauses in May 2013 (as discussed on this thread). There is one website which gives instructions on how to get out of a floor clause.
http://www.clausulasuelo.info/p/clausula-suelo-banco-sabadell.html
Basically, the say to (1) Make a claim to Customer Services at the bank's headquarters. (2) Make a claim to the Defensor del Cliente, which they describe as a more independent entity than Customer Service. (3) Make a legal claim.

Before taking any action, I emailed my bank asking if we could leave the floor clause, to which they replied:
"Banco Sabadell no tiene ninguna sentencia que le se le obligue a la eliminación de las clausula tuneles como ha sido el caso de otros Bancos como el BBVA." :(

Has anyone else on this forum had any success (or lack of success) in exiting a mortgage floor clause in Spain?

gibbo12
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Re: Mortgage floor levels abolished ?

Postby gibbo12 » Mon Mar 13, 2017 5:46 pm

It seems that all my friends are starting to look at this and a few companies have popped up to help so maybe contact [/url] www.floorclausepsain.com [/url] or a reputable lawyer to advise you

Beachcomber
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Re: Mortgage floor levels abolished ?

Postby Beachcomber » Mon Mar 13, 2017 6:20 pm

Each bank to which this applies should have a form available on its web site. Google for 'clausula suelo formulario' adding the name of the bank.

This one, as an example, is for Unicaja:

https://www.unicajabanco.es/resources/1487585427201.pdf

Only use a claims lawyer as a last resort. They may offer to take cases on a 'no win no fee' basis but will take a huge commission and your dealings with the bank may be prejudiced. Far better to use a translator, if necessary, to help you complete the form and submit it to the bank in your own name.

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Re: Mortgage floor levels abolished ?

Postby Moondance » Sat Jun 24, 2017 11:47 am

Hi
I've just completed the 'process' with my bank La Caixa to claim overpayments due to the floor clause. After 3 months 10 days I received a standard letter (I know this as a friend with the same bank received it as well!) to say I should have know there was a floor clause so no claim due. They did drop the clause in August 2015, possibly as people have and continue to make claims via lawyers which are largely successful. In my experience the banks have no intention of paying back any money unless forced to via the legal system, which is my next step.


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