Financial Times:
Spain’s banking sector suffered an unexpected blow on Wednesday when the European Court of Justice ordered lenders to hand back to their clients all the money they made on “unfair” mortgage floor clauses.
[...]
Floor clauses in effect impose a minimum interest rate on floating-rate mortgages by setting a limit on how far mortgage rates can fall in tandem with the benchmark rate. In practice, this meant that Spanish mortgage buyers did not profit fully from the record-low interest rate environment in recent years.
The clauses were ruled illegal by the Spanish high court in 2013. At the same time, the court decided that banks should not have to pay back the excess money they received as a result of the floor clauses before the ruling. That part of the decision was challenged by borrowers, and the Luxembourg-based European Court sided with them on Wednesday.
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El País:
European Court rules Spanish mortgage law is abusive - Luxembourg tribunal says that national legislation breaches consumer protection directive
The European Court of Justice on Thursday ruled that Spain’s mortgage law is incompatible with a European directive on abusive practices in consumer contracts, opening the door to more legal protection for households facing eviction from their family home.
The ruling comes in response to a question posed by a Barcelona court in connection with the eviction of Moroccan immigrant Mohammed Aziz from his home in January 2011, after he failed to meet mortgage payments on a 138,000-euro loan granted to him by savings bank CatalunyaCaixa in July 2007.
Read full article here.