06 Apr 2011 12:00 AM:
Does anyone know any more about this? Any further info much appreciated.
Banking consumer group Ausbanc said thousands of Spanish homeowners will benefit from a ruling by a Spanish court declaring minimum-interest clauses, or collars, included in many variable-rate mortgage deals, as void.
Ausbanc has campaigned intensely against minimum-interest clauses, noting that many banks hid them in their small print, which hindered homeowners benefitting from falling interest rates.
“This transcendental ruling will benefit thousands of Spanish citizens who have a mortgage with one of the guilty banks,” said consumer advocacy group Ausbanc in a statement.
A court in Seville ruled on September 30th 2010 the clause as null and void because of its abusive character and said Banks BBVA, Caixa Galicia and Cajamar should eliminate such clauses from mortgage contracts and not use them in the future.
Ausbanc has campaigned for months against these minimum-interest clauses, noting that many banks hid them in their small print. They say banks billed them as protection against rising interest rates for mortgage holders and sold them to clients who did not understand the implications. The schemes protected mortgage holders by putting a maximum limit on the interest rate they would pay, but a floor when rates came back down. For thousands of mortgage holders it has meant mortgage payments remaining high even as interest rates are low.
Moreover, Ausbanc said the ruling “highlights the cavalier attitude of the Bank of Spain, as in a recent report it determined the clause was not abusive.”
Thread:
COLLAR ON MORTGAGE VOID
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