Over the last 20 years or so, buyers from all over the world have flocked to Spain in order to buy their dream Spanish property. In doing so, many of them used tracker mortgages and, as a result, may have been paying too much interest on the money they borrowed.
Tracker mortgages offer interest rates that track the Euribor (European Interbank Offered Rate) which is a reference rate that is updated daily. It takes into account the average interest across all the countries in the Eurozone. Tracker mortgages are good because if interest rates are good because if the interest rate falls, then the amount of interest a borrow pays should also fall.
Many Spanish banks, however, have been found guilty of not passing the decrease in interest onto their clients when the rates dropped in 2009. Instead, they included a minimum rate of 3% to 4% in their mortgage agreements meaning that borrowers never benefited from the lower rates and banks continued to enjoy high profits from their lending activities.
The “clausula suelo”, or interest floor clause, caused many to lose their entire life savings as well as their homes because they could not keep up the repayments. The Supreme Court in Spain agreed that many of the clauses in the mortgage agreements are unfair and have ruled that mortgage holders are able to claim back their money.
In some cases, the amount of money which can be reclaimed runs into thousands of Euro.