Several million people took a mortgage to buy their home in Spain in recent years before the financial crisis began and the real estate boom in Spain ended. Therefore, most of them signed a variable mortgage loan , so they had to pay a fairly high Euribor , as was discussed a few weeks ago in ‘ El País ‘.
But this type of mortgage loan had the differentials (fixed percentage of the interest rate charged by banks that is added to the Euribor) agreed to lower, since no one thought that one day those values were going to become negative .
We can ask ourselves: Under what conditions are banks willing to cancel the differential on mortgage loans?
Bankinter, Banco Santander and ING Direct already have mortgage loan clients with negative spreads
It has happened that the banks have negative differentials at the moment , that during these weeks the banks have been in the spotlight due to the cancellation of the mortgage loans linked to the IRPH .
The 1-year Euribor has closed negative for the first time since 2016 this year, at -0.008 percent. In August it reached the level of -0.356 percent . Therefore, mortgage loans with minimum spreads are the beneficiaries for having negative interest.
For home loan customers who signed with:
- Bankinter with a differential of 0.18 percent during 2007.
- In 2008, with Banco Santander, it offered a 0.25 percent differential through the Caja del Duero .
- ING Direct placed its Orange Mortgage with a 0.33 percent spread .
If the Euribor continues to decline, the mortgage loan customers of the former Caixa Galicia with a 0.38 percent differential and Barclays with a 0.39 percent differential could soon be added to this list of mortgage loans with negative interest.
Banks rush so that clients with negative spreads only pay the outstanding capital
Now the big question arises if now the banks are going to compensate this type of customer. The answer of the banks is that it does not make sense to pay for money that has been loaned to their clients.
The rationale for the banking entities is based on the fact that the loans that are agreed between the banking entities and the users is a compensatory interest rate , and therefore, they understand that the final rate cannot be negative.
What banks are rushing to do is cancel these differentials so that the interest rates applied to this interest rate on mortgage loans is 0 , that is, that customers pay only the capital they have pending.
The affected banking entities follow the rule of only collecting fees without any interest rate
From Bankinter they state that their mortgage loans with Euribor plus 0.18 percent is a small percentage of the mortgage portfolio that the entity has. At the moment they are at 0 percent , that is, clients are paying the capital they have pending. Bankinter says that mortgage loans are legally classified as unilateral.
From ING Direct that contracted Euribor plus the 0.33 percent differential, they are not paying any interest rate and they only have to return the capital of the mortgage loan while the situation of negative rates is below the established differential.
Banco Santander is following the same policy that Bankinter and ING Direct are following. The spread is being canceled and no interest rates are charged to mortgage loan customers who are in this situation.
But clearly there is no disagreement with the solution that the banks have taken. If the interest rate is negative, it should be discounted from the part of the principal of the mortgage loan that is being paid in the monthly installment, according to the OCU.
The judicial route is ruled out because they are still amounts of little value
At the moment, there are few clients of banking entities that have consulted with a consumer association, since it does not pay because at the moment they are amounts with little value .
Going to court for small amounts does not compensate home loan customers, and clearly no one lends money to be lost later. In addition, many judges would adopt the argument that no one lends to lose money , to resolve claims that are presented in court.
But as always happens, society is waiting for the banks to give an answer. If the trend of negative interest rates continues, which looks to pass, of the Euribor, it is very likely that the customers of the affected mortgage loans will begin to file extrajudicial claims such as through the courts.