Spain's IRPH mortgage contracts did not constitute market abuse, Supreme Court says

Credit: REUTERS/ALBERT GEA

The IRPH mortgage price index used during Spain's property crisis was valid and did not constitute an abuse of market, even though there was a lack of transparency for some of those contracts, Spain's Supreme Court said on Wednesday.

By Jesús Aguado

MADRID, Oct 21 (Reuters) - The IRPH mortgage price index used during Spain's property crisis was valid and did not constitute an abuse of market, even though there was a lack of transparency for some of those contracts, Spain's Supreme Court said on Wednesday.

The much-awaited ruling followed a European Court of Justice (ECJ) decision to send this dispute over Spanish mortgages back to national courts, opening the way for individual claims.

The Supreme Court said in a press release that in four of the five IRPH cases it analysed there "was no abuse", in line with the ECJ ruling from March, even if failure to report the index's evolution marked a lack of transparency.

The court said it would deliberate on a fifth IRPH case later on Wednesday but that it was of a different nature, related to social housing.

Hundreds of thousands of home loans were sold in Spain, mainly in 2007 and 2008, based on the IRPH, at interest rates that tended to be higher than interbank benchmark rate Euribor.

The ruling was seen as a relief for Spanish banks, which are already struggling with the economic impact from the COVID-19 outbreak and ultra low interest rates.

Shares in Caixabank CABK.MC, the most exposed lender to IRPH contracts, with 5.7 billion euros, were however slightly down 0.2%, while Bankia BKIA.MC was up 0.8%.

The court has not yet published the ruling itself, and said that should be done in the coming days.

(Reporting by Jesús Aguado; additional reporting by Emma Pinedo, editing by Ingrid Melander)

((jesus.aguado@thomsonreuters.com; +34 91 585 8339; Reuters Messaging: Reuters Messaging: jesus.aguado.reuters.com@reuters.net))

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