Bill to lower interest on variable-rate mortgages for struggling borrowers

Automatic summary, not yet reviewed

1. The bill would reduce for one year the interest on variable-rate mortgages on a borrower's main home for those in economic hardship, setting it at Euribor plus 0.10 %. A borrower would be considered vulnerable with low income (measured against the IPREMIPREM A public income indicator used in Spain to set income limits for public aid., with higher limits for children, seniors or disability) whose mortgage payment plus basic utilities equals at least 30 % of the household's net income.
2. The borrower would have to prove the hardship to the bank with documents such as a census registration certificate, a sworn statement on income and a property registry report. The bank would have to apply the reduction within 15 calendar days at most and formalize it in a public deed and register it.
3. Borrowers who benefit without meeting the requirements would be liable for damages and costs, which could not be less than the benefit obtained. Notary and registry fees would be paid by the bank with a 50 % discount, and lenders would have one month from entry into force to tell customers about this option.
4. The bill would amend Law 2/1994 to make it easier to switch variable-rate mortgages to fixed rates: the bank would have to offer main-home borrowers the same conditions as new customers, and the lender would cover the fees for the change and the appraisal costs.

Who it affects

• Mortgage borrowers in difficulty: Could request the interest reduction if they owe the mortgage on their main home and meet the economic hardship requirements.
• Financial institutions: Would have to apply the reduction within 15 days, inform customers within a month, report approvals to the Bank of Spain and pay the discounted fees.
• Main-home borrowers who want a fixed rate: Could automatically convert their variable mortgage to a fixed rate with their bank or switch to another lender, with no fees or appraisal costs.
• Applicants who do not meet the requirements: Would be liable for damages and costs if they applied for the measures without meeting the requirements.

Words worth knowing

Euríbor (Euribor)

The rate at which European banks lend money to each other; it is the reference used to set most Spanish variable-rate mortgages.

IPREM

A public income indicator used in Spain to set income limits for public aid.

Declaración responsable (sworn statement)

A document in which the applicant states, under their own responsibility, that certain facts are true.

Nota simple (property registry report)

An informative document from the Property Registry showing who owns a property and what charges are on it.

Subrogación (mortgage transfer)

Moving a mortgage from one bank to another, or changing its terms, without taking out a new loan.

It summarizes the text as it was introduced. It is written by artificial intelligence and may contain mistakes: the official text is what counts. Read the official text · How we make summaries