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The banking's fight back: floor-clauses vs zero-clauses

The banking's fight back: floor-clauses vs zero-clauses

Spanish banks are getting ready to face the next CJEU’s Advocate General’s opinion on floor-clauses’ effects by implementing “zero-clauses” and by growing fixed interest mortgage’s sellings up.

The next CJEU’s Advocate General’s line on floor clauses could erase them and to make banking give mortgagors back their overpaid amounts for their mortgages. This decision could have a cost to the Spanish banking system, calculated by the Bank of Spain, of between 5bn to 7.6bn euros.

In this regard, Spanish banks are redefining their strategies to avoid the CJEU’s Advocate General’s line’s effects. Traditionally, in Spain, the majority of granted mortgages have been floating-rate mortgages instead of fixed interest mortgages.

In floating-rate mortgages, usually linked to Euribor, the fee went up or down as Euribor (an interest rates’ reference index) did it so due to that, the client was paying more or less money to the bank and, for instance, the incomes that the bank was receiving because of the mortgages were very volatile. In order to avoid that, floor-clauses were implemented in the mortgages to maintain attached the fee regardless the Euribor’s up and downs. These clauses were declared abusive by the Spanish Supreme Court.

In such a way, following the Spanish economic newspaper Cinco Días, from April and due to banking’s juridical pressure on floor-clauses topic, the number of granted fixed interest mortgages has been tripled and they have grown up to 14.8%. In the fixed interest mortgages the fee to be paid remains constant until the loan is finally paid. That guarantees the bank a fixed incomes and they are not affected by Euribor’s up and downs anymore.

But the followed strategies by the banking system to counteract the likely juridical decisions on floor clauses are turning floating-rate mortgages into fixed interest mortgages granting to the mortgagors that they “could keep paying the same every year until the debt’s ending, although Euribor could grow up in the future, in exchange of give up from claiming for the paid amounts as a consequence of the floor-clauses in the last years” and to implement the so-called zero-clauses in the granted floating-rate mortgages, the bank assures itself that interest rates will never go down by 0% with and they avoid to pay to the mortgagor if the Euribor’s rates are negatives.

This banking system’s measures are provoking doubts on its legality, especially when the context is marked by the CJEU’s Advocate General’s statement on floor-clauses, which is imminent, and the citizenship is concerned on this issue. Experts do not agree with themselves and that, without any doubt, will intensify the controversy.

If you have any legal doubt on your mortgage and about how it could affect your assets, please do not hesitate to contact us and you will be advised at

Del Canto Chambers’ newsroom.

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