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Supreme Court rules that loan agreements tied to mortgage price index were not abusive

Tribunal believes lenders lacked transparency but rules against potential payouts of millions to customers


21 October 2020 04:52 PM


ACN | Barcelona

The Spanish Supreme Court believes that loan agreements tied to Spain’s mortgage price index (known as the IRPH) lacked transparency, but were ultimately not abusive.

In a statement issued on Wednesday, the court noted that it found a "lack of transparency for not having reported on the evolution of the index in the previous two years," meaning that the interest rate of around 400,000 families across Spain likely should have been lowered in accordance with the lowered mortgage price index. 

However, the court also believes that no abuse has been evident in the cases analyzed, and therefore considers that the IRPH is a valid index

Had the Spanish Supreme Court sided with the opinion that the pricing was abusive, it could have led to potentially millions of euros in payouts to customers. 

European Court back-and-forth

The verdict comes seven months after the European judiciary ruled that the loan agreements lacked transparency and possibly misled customers, but left the final decision in the hands of the Spanish courts.

In the March ruling, the Luxembourg-based court urged Spanish courts to "ensure the clear and understandable nature" of mortgage loan agreement clauses and called for them to be "replaced" in the event that they were considered abusive for the purpose of protecting customers. 

That CJEU decision contradicted the Spanish Supreme Court's initial ruling on the topic, which considered that mortgages referred to in the IRPH could not be subject to judicial control because they do not imply any abuse by the banks.


  • The front of a Banc Santander office, photographed in July 2016 (by Molina J.)

  • The front of a Banc Santander office, photographed in July 2016 (by Molina J.)


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