The European Court of Justice in Kirchberg ruled Wednesday that Spanish banks must reimburse clients who had signed mortgage contracts that unfairly prevented them from benefiting from a steady drop in interest rates.
The decision by the Luxembourg court caused shares in Spanish lenders to fall with small lender Liberbank leading losses, down over ten percent in mid-morning trading.
Spain’s Supreme Court ruled in May 2013 that so-called mortgage “floor clauses”, which impose a limit on how far interest rates in a variable rate mortgage can fall in line with the benchmark rate, were unfair because consumers had not been properly informed of the consequences.
But it limited any reimbursements to amounts paid after the date of the its ruling.
Consumers had asked for the repayment of the sums they claim have been unduly paid to banks from the date they signed their mortgages.
The European Court of Justice in Kirchn ruled that the proposed time limit on the refunds is illegal and customers should not be bound by such unfair terms.