A court in Bilbao has ruled that the interest rate “floor” in mortgage agreements which sets a limit below which interest on a mortgage may not fall, is abusive.
The new sentence has declared the so called “cláusula suelo” void and has ordered that the Banco Guipuzcoano repay its client for amounts charged due to a three percent interest rate floor on a mortgage of 480,000 taken out in 2004.
The mortgage carried a variable interest rate with reference to the Euribor plus 0.5% but with a floor or three percent and a ceiling of 15%.
The sentence is subject to appeal in the Provincial Audience of Vizcaya and today the Civil Chamber of the Supreme Tribunal is meeting to resolve the vailidity of these types of clauses wwith “floors and ceilings” for interest rates.
