Mortgage Loan Reference Index (IRPH)

Mortgage Loan Reference Index (IRPH)

More than half a million mortgages in Spain were taken out using the IRPH-Banks and IRPH-Savings Banks as the reference for the calculation of interest. The financial entities promoted them among their clients, assuring them that it was one of the most stable indices and less subject to fluctuations than the Euribor. Unfortunately, they did not say that although they were more stable they were also traditionally placed above the Euribor and therefore involved a predictable rise in the mortgage payments with no compensation.

In the end, the European authorities imposed the substitution of IRPH-Banks and IRPH-Savings Banks on Spain as they considered that the calculation method used to set those indices was open to manipulation by the entities themselves and, therefore, had to be considered null and void. As a consequence, unilaterally and with no possibility of negotiation, the single IRPH, the IRPH-Entities, was imposed as a substitute for the old IRPH-Banks and IRPH-Savings Banks and is still in force.

As has been recognised by a number of legal sentences, we consider that the entities did not act with due transparency when informing their clients of the real consequences of taking out a loan that took the IRPH as reference and that the mortgage holders’ rights had not been respected when a renewal of the loan was imposed without negotiation to introduce the IRPH-Entities as a substitute for the annulled IRPH-Banks and IRPH-Savings Banks. Two good reasons for demanding nullity and the return of the excessive interest which had been unduly charged.

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