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Author Topic: Clausula Suelo. The Spanish banks equivalent of PPI?

Offline Pelinor

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Clausula Suelo. The Spanish banks equivalent of PPI?
« on: Fri 17 May 2013, 16:41 »
Wife's just been talking to someone in the bank who told her about this 'Clausula Suelo'. We don't really understand it but heres what she was told.
For years Spanish banks have been including the price of the floor (Suelo) when calculating the price of the mortgages on apartments. This incorrect/now illegal calculation could add up to 15% on the price of the loan. Anyway this practice has apparently been declared illegal and banks are open to claims, and it would seem there are tens of thousands. :undecided:

Sorry don't know much more than that. I think the wife lost interest when the person said it only affects people with apartments! Anyone else heard of this ........ or am I behind the times! :undecided:

Online Nova

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Clausula Suelo. The Spanish banks equivalent of PPI?
« Reply #1 on: Fri 17 May 2013, 16:52 »
Here you are, Cláusula suelo, the "floor clause".  Interest rates are variable upwards only and if the base rate lowers, the bank's interest rate does not, meaning that the "variable rate" mortgage effectively becomes fixed rate if the base rate falls below a certain level and homeowners do not benefit from the base rate falls, only the rises.  Although as I understand this article, the clause is only illegal if not made explicit to the mortgagee.

I don't see the connection with apartments, but I shall keep looking  :tiphat:

Edit:  ah the clause is also known as "tasa piso" - nothing to do with apartments  ;)  Here's a little report on the claúsula suelo/tasa piso from 2008, which gives an idea of the effect it has on borrowers.
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Offline Janet

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Clausula Suelo. The Spanish banks equivalent of PPI?
« Reply #2 on: Fri 17 May 2013, 17:04 »
It doesn't apply just to apartments.  As Nova says, it's the minimum rate of interest the mortgage will attract, written into the mortgage, regardless of how low the Euribor actually goes. Thus someone could take out a mortgage when the interest rate is at 6%, and the mortgage escritura might say that the "suelo" (i.e. minimum interest rate) is 4%. It cannot go below 4% even if the Euribor goes down to 0.5%.

These "suelo" clauses are in almost every mortgage issued in Spain, and around a week ago, Spain's Supreme Court issued a ruling that the clauses were "abusive" unless "comprehensible and transparent". That definition puts a higher burden of proof on the banks than just "having been made explicit". The Supreme Court actually specified that the banks have to do more than "just be clear", and that banks must demonstrate efforts to ensure mortgage customers understand not just the issue, but its significance and potential consequences.

The Supreme Court said in its ruling that any such clauses from now on will be declared null and void. It's not a retroactive judgment, but clearly in the case of an eviction, there is now legislation underway in any case enabling the person being evicted to appeal to the Court to stop the eviction because of abusive mortgage clauses. Some banks, e.g. BBVA, have announced over the last couple of days that they're investigating abolishing them entirely ... which suggests that all their bloody clausulas suelo are abusive ...

This is my understanding of the situation, anyway.  :tiphat:
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Offline Pelinor

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Clausula Suelo. The Spanish banks equivalent of PPI?
« Reply #3 on: Fri 17 May 2013, 17:40 »
Wow! how wrong can you be. The person telling the wife was going on about floor space and that the banks were charging or including the floor area on the mortgage when the only people that should be charged for the floor space were the owners of the ground floor apartment.

Bonkers!! I mean how the hell do you get from interest rates to bloody floor space! :headscratchyellow:


Offline Myrtle Hogan-Lance

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Clausula Suelo. The Spanish banks equivalent of PPI?
« Reply #4 on: Fri 17 May 2013, 17:51 »
So why should somebody on the ground floor be charged for floor space?  Everybody's ceiling is somebody's floor; does that enter into it?  I also don't get how you can charge on floor space, or if so, why the floor has to be connected to the ground.

Offline Perikles

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Clausula Suelo. The Spanish banks equivalent of PPI?
« Reply #5 on: Fri 17 May 2013, 18:03 »
or if so, why the floor has to be connected to the ground.

Now that really is a bizarre question. Does your house float?
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Offline Pelinor

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Clausula Suelo. The Spanish banks equivalent of PPI?
« Reply #6 on: Fri 17 May 2013, 18:06 »
As I said Myrtle Bonkers! The person telling the wife obviously only had part of a story, I would suggest the part that the banks were doing something wrong, and just made the rest up using the word Suelo as a start point.

Offline Janet

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Clausula Suelo. The Spanish banks equivalent of PPI?
« Reply #7 on: Fri 17 May 2013, 18:15 »
it's an easy mistake to make from the name itself, but the "floor" means the "base" interest rate, not an actual floor.  :tiphat:
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Offline Myrtle Hogan-Lance

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Clausula Suelo. The Spanish banks equivalent of PPI?
« Reply #8 on: Fri 17 May 2013, 18:22 »
Well, that's what I would assume, but the ignorance on the part of the bank worker trying to sell Mrs Guanche a story is hysterical.   :rofl:



Offline Janet

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Clausula Suelo. The Spanish banks equivalent of PPI?
« Reply #9 on: Fri 17 May 2013, 18:28 »
actually it had gone over my head that G's wife was told by someone in a bank! :laugh:
One must have sunshine, freedom and flowers. Hans Christian Andersen