The IRPH, Mortgage Loan Reference Index, is a reference index used in Spanish mortgages. When a financial institution grants a variable interest mortgage loan, interest is added to the amount of the loan, which in this case is determined by the IRPH. The IRPH, an index guaranteed by the Bank of Spain, is calculated as the simple average of the interest established in mortgages with a duration equal to or greater than three years. This means that the IRPH varies depending on the interest that banks establish in their mortgage contracts over 3 years. Therefore, it may happen that even if the Euribor collapses, the Spanish mortgages referenced to the IRPH maintain an amount higher than the average.
In November 2021, the Court of Justice of the European Union (CJEU) left it to the Spanish courts to decide whether or not the mortgages referenced to the IRPH were transparent. Shortly after, the Supreme Court ruled out abusiveness, in judgments 42, 43 and 44/2022, of January 27. Following this support for mortgages referenced to the IRPH, in November 2022 the Supreme Court determined, even acknowledging the lack of transparency, that the conditions of said mortgage contracts are not abusive. Its main argument is the non-obligation of entities to report on an index that anyone can consult, because it is publicly accessible. It should be remembered that, as the CJEU points out, it is the Spanish court that must create the jurisprudence to deal with these cases.
During the last few years, the IRPH has been the subject of controversy, since it has frequently implied higher applied interest rates than those of Euribor-linked mortgages. In addition, those affected complain of not having received adequate and sufficient explanations from financial institutions to understand the implications of their choice. Meanwhile, banks hide behind the argument that the IRPH is an official index and, therefore, its application is legitimate. In short, it is the lack of transparency that has led many affected to take action and take legal action to claim the conditions of their mortgage.
Although the Supreme Court has not ruled that the mortgages referenced to the IRPH are abusive, it has recognized their lack of transparency. According to the General Law for the Defense of Consumers and Users, those clauses that have not been negotiated with the consumer individually and explicitly are considered abusive, at the same time as those not expressly consented to and that go against good faith, harming the consumer and borrower here. Taking this definition into account, it is necessary to analyze each mortgage contract individually.
Given the complexity of these cases, it is crucial to have professional advice to review the clauses and the contract properly and, when appropriate, successfully claim their abusiveness. It is important to bear in mind that each situation is unique and the mortgage contract must be carefully analyzed to verify if certain conditions are met that allow for an abusive mortgage to be considered, such as the absence of “clear and understandable wording” or the lack of information on the factors used in the calculation of the index.
Despite the position of the Supreme Court, those affected by mortgages referenced to the IRPH still have the possibility of exercising their rights. As the Association of Financial Users (ASUFIN) points out, the avenues for the claim are still open. For this reason, in the case of suspecting abusive conditions in the contractual conditions, it is advisable to consult a professional. Having specialized legal help in claiming a mortgage referenced to the IRPH is crucial to achieving a favorable result.
