Mortgage Loan Reference Index IRPH

What is the IRPH?

IRPH is the Spanish acronym for Mortgage Loan Reference Index and it used as a reference to calculate the rates for mortgage loans. Until October 2013 there were 3 types of IRPH:

1. IRPH banks.
2. IRPH savings banks.
3. IRPH combination of organisations (an average of the 2 above).

Currently, only the third is applicable.

Whilst the Euribor registers historic lows, the IRPH is a much higher index, which is why the users that have loans than reference it are placed in a dangerous position.

How is the IRPH calculated?

The IRPH is calculated with the average monthly interests applied to new mortgages registered on the mortgage market by banks and banks and savings banks. To update this index the bank itself needs to send economic data to the Bank of Spain. That means that the data is sent in with no external audits and with no transparency.
If a bank awards more loans with a higher index, the index will automatically raise. If they award more loans with a higher interest rate, the index will raise. If more loans are offered at a lower rate, the interest decreases.

The bank itself has an influence on the decision of the value of the IRPH, which means the clients are totally helpless.

Is it possible to claim nullity?

In December 2017 the Supreme Court decided in favour of the banks, declaring that the mere application of these reference indexes cannot be considered abusive as they are regulated by the Bank of Spain, being official references. Despite this, there is still a possibility for the bank users affected since, despite this resolution, two of the magistrates of the Supreme Court voted privately in favour of declaring nullity due to abuse. There are judges that are continuing to declare the nullity of the IRPH after the cited resolution of the Supreme Court, citing the lack of clear and comprehensible information about the comparative cost compared to other types of loan.