The new directive on mortgage loans must be improved to be useful for the consumer

The March 21 was the deadline for transposition of the directive on mortgage credit, which aims to harmonize consumer protection legislation in connection with the hiring of mortgage loans. Spain has not yet transposed this directive into national law, although much of the reporting obligations established by the Directive are already included in the Spanish legislation.

As major developments in the directive are warnings about the risks of contracting multicurrency mortgages or the impact of a rise in interest rates in the case of mortgages to variable rate.

Another change that is derived from the directive is the prohibition on requiring the procurement of products associated with the loan, but with exceptions. Also it leaves the possibility of allowing this practice if such linked products pose a "clear benefit" for the consumer and expressly allows contracting entities may require life insurance.

OCU´s opinion about this practice banks currently they circumvent this limitation because it does not require hiring additional products, but offer hiring bonuses.

Directive also requires calculating the APR including all associated costs to the loan, unaccountably as occurs under Spanish law, notary costs are excluded. 

OCU generally welcomes this new policy, but warns some improvable points: 

It is important that consumers know that quotas of variable rate loans may increase, however, the Directive establishes the obligation to indicate the APR to the highest of the last 20 years minimum borrowing rate. For OCU with the index calculation it is not realistic and provides a bias towards fixed rate loans, which a priori are more interesting for banks. 

OCU believes that APR calculations are still not realistic. According to the Directive the APR must include all expenses this to pay in connection with the credit agreement and who knows the lender. It should therefore include interest, commissions, taxes, compensation of credit intermediaries, the costs of appraisal of property for mortgage purposes and any other expense, except for notarial costs, which is necessary to obtain credit, such as life insurance or fire insurance. In the case of life insurance institutions use the amount of the first year premium for a young person, but keep in mind that most life insurance that are hired are annual renewable, therefore is a product "cheap" at the time of recruitment but whose premiums will grow each year, so they can get to be multiplied by 4 or by 5 when are reached age 50, age at which many continue to pay the loan. OCU understand that entities should be obliged to provide its customers a realistic estimate of the premiums payable for the lifetime of the contract and use that data to calculate the APR. 

OCU believes that the wealth of information and extensive warnings undertakes to deliver to the consumer should not serve to shield the entities before any claims for unfair terms, flaws in the consent or lack of transparency. It must be remembered that the existing rules of transparency and included extensive reporting requirements since 1994, including the delivery of a binding offer, without the consumer has avoided hiring multicurrency clause floor or mortgages. OCU has been active in the legal defense of those affected in these cases, as it got to be declared void by the Supreme Court clause floor of Banco Popular. 

OCU recalls potentially affected by this type of products that can go to the platform Mobilize http://www.ocu.org/movilizate/contra-los-abusos-bancarios to learn about their rights and possible actions to claim in the case possible.