The Advocate General of the Court of Justice of the European Union (TUE) Maciej Szpunar said Tuesday that clients should be compensated for the use of the Mortgage Loan Reference Index (IRPH) in mortgages.

What is IRPH? It is the old Tax of Documented Legal Acts (IAJD), now with the initials IRPH (Mortgage Loan Reference Index). This is one of the indexes to which the loans granted for the purchase of housing are referenced. How is it calculated? IRPH is calculated based on an average of three-year loans granted by banks, savings banks and financial institutions in general. Its origin dates from a ministerial order of May 1994 on transparency of financial conditions that was intended to create a stable mortgage reference against the oscillation of other indices. It was widely used in the period between 2005 and 2009, coinciding with the rise of the real estate market and with a Euribor that seemed unstoppable in the rise. In this context, the less volatile nature of IRPH added attractiveness and was a refuge for many clients. Why is it controversial? When the crisis dynamited the real estate market, the Euribor began to fall further burdened by the economic stimulus programs put in place by the European Central Bank (ECB) to revive the economy. It remained stable, causing the users who had hired it to pay higher fees than those who had variable loans with reference to the other index. Today the IRPH indicator is at its historical minimum level bordering on 40 basic negative points. clients? The associations of banking users now claim that the entities did not explain the risks clearly enough and that there was a bad marketing practice, an issue that the CJEU should settle after the consultations made by a court of First Instance of Barcelona. traces the judicial battle for this index? In Spain, the Supreme Court validated the clause af In 2017, arguing that it was an official and easy-to-know index for a "normally informed and reasonably attentive and insightful" customer. The High Court thus gave the reason for an appeal brought by Kutxabank against a claim by a client requesting the nullity of the IRPH. The question now is whether this index has room for European transparency directives. How many mortgages does it affect? ​​According to DBRS estimates, of the total residential mortgages granted by Spanish entities since 1999, about 7.6% were linked to IRPH. DBRS estimates that around 36% of the total residential mortgages linked to IRPH since 2004 were granted in Catalonia, the most affected region. What should the European justice clarify? If the IRPH is exempt from transparency control, how will the mortgages be if the judgment favors the client - if the IRPH should be replaced by the Euribor - and if, in case of having to return the money They will do so retroactively. This last point also opens the question of how much that period of retroactivity would cover, which is another key to defining the impact on the Spanish banking system. What impact will it have on banking? The impact for banking could be up to 44,000 million in the most extreme case, which would include up to operations already completed. It would be necessary to see the way in which it would be effective taking into account the double impact, on the one hand, the higher payment in interest and the lower amortization of capital, according to Antonio Gallardo, financial expert at iAhorro.com

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