Mortgage in Spain and default interest

The clauses concerning default interest are declared abusive.

The Supreme Court submitted a request for a preliminary ruling to the European Court of Justice on Case C-94/17, which was answered on August 7, 2018.

In the present case, the abusive nature of the clauses concerning default interest on loan contracts was questioned. The Supreme Court had ruled that according to article 85, paragraph 6, of the General Law for the Defense of Consumers and Users, this type of clauses will be considered abusive when they set an interest of delay higher by two percentage points than the remunerative interest agreed. Once the abusive nature has been declared, only the remunerative interest should continue accruing.

The European Court of Justice supports the Spanish Supreme Court, and argues that the purpose of the Directive on this type of clauses is to avoid an imbalance between the rights and obligations of the parties to the contract to the detriment of the consumer. As the Spanish Supreme Court in its decision protects the consumer, the EU Court declares that its decision is in accordance with EU regulations.

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