The Supreme Court refuses to annul the IRPH in general and orders each mortgage to be analysed on a case-by-case basis.

The Supreme Court has decided not to generally annul mortgages linked to the IRPH (Housing Loan Reference Index) on the grounds that they are abusive. Instead of a single solution, it has made it clear that it will be up to the courts, on a case-by-case basis, to determine whether or not a clause with this index passes the transparency test.

According to the Supreme Court itself, there is no one-size-fits-all answer for all loans: the assessment depends on the specific circumstances of each mortgage and what is proven in each case. Even so, the High Court has provided a series of guidelines to help judges analyse how these clauses were marketed and whether there was a real lack of transparency.

Legalion Abogados refers to a ‘decisive turning point’ in this type of litigation. The Supreme Court rules out any automatic annulment of the IRPH and requires an individual examination. In practice, this means that many of those affected will find it difficult to obtain a favourable ruling if they cannot prove that the bank concealed relevant information about the index from them.

According to this law firm, the decision affects more than one million mortgages linked to the IRPH, with a volume exceeding 40 billion euros. Banks such as Caixabank, Santander, BBVA and Kutxabank, which had accumulated many claims, can now breathe a sigh of relief.

In summary: the IRPH is not presumed to be abusive. Its validity depends on the transparency with which the customer was informed and whether they understood how the index worked and where to consult its values.

What the courts must assess to decide whether there was abuse

The Supreme Court, in line with the Court of Justice of the European Union, points out that the average consumer must be able to understand how the IRPH plus its differential is calculated and what economic impact it may have on their loan.

To begin with, it will be necessary to examine whether the loan was subject to the transparency regulations in force at the time. Loans signed before 9 December 2007 and with a capital of more than 25 million pesetas were excluded from the 1994 Order and are therefore governed by the general terms and conditions of contract.

Regarding the information provided to consumers, the Supreme Court considers that the publication in the Official State Gazette (BOE) of the Bank of Spain circulars of 1994 and 2012 guarantees access to the index data. However, it clarifies that it is not enough to mention the 1990 circular, because it was never published in the BOE.

In the case of loans to which the 1994 Order does apply, it will be necessary to examine whether the mandatory information leaflet was provided and whether the famous negative spread referred to in Circular 5/1994 was explained. If this was not the case, the judge must assess whether this omission was compensated for by other sufficient information, such as clear references to where the index data could be consulted or explanations of the applicable APR.

The Supreme Court emphasises that the use of the IRPH does not prevent customers from comparing offers with other official indices, even if these indices do not have a structure similar to an APR.

Asufin’s criticism

Asufin considers that this position of the Supreme Court ‘twists’ European doctrine and once again favours the banks. The association insists that the CJEU has said that consumers do not have to seek external information — such as the BOE — to understand their mortgage index, and that it is the bank that must explain it clearly.

It also criticises the Supreme Court for ignoring the evolution of the Euribor compared to the IRPH, denying that this comparison can be used to demonstrate an imbalance. According to Asufin, the famous ‘gap’ between the two indices has been evident from the outset.

The association also regrets that the Supreme Court justifies the fact that IRPH mortgages were offered, in many cases, to more vulnerable customers, allegedly for risk reasons. Asufin argues that, in reality, they were offered to less solvent profiles because they were a more expensive product.

Finally, it stresses that the Supreme Court itself indirectly admits that IRPH and Euribor are not comparable, as IRPH incorporates APR into its calculation. For Asufin, if a comparison is to be made, it should be between APRs, using the Bank of Spain’s synthetic index.