Following the financial crisis of 2008, a loss of confidence by the consumers was addressed in the financial sector as well as the higher difficulty to tackle with their mortgage loans by creditors.
Proyecto de Ley de crédito inmobiliario
In this context, the European Parliament and the Council published the European Directive 2014/17 on credit agreements, with the aim of establishing a properly harmonized legal framework at european level, strengthening transparency in this type of contracts and establishing rules of conduct applicable to the activity of creditors and intermediaries.
In order to transpose this Directive, the Spanish Government published in November 2017 the Proyecto de Ley (PL) reguladora de los contratos de Crédito Inmobiliario. This PL includes several provisions that regulate some aspects that are not specifically covered in the European Directive or go beyond its content, with the aim of reinforcing certain aspects of the legal regime of mortgage contracting, either by requiring greater guarantees, reinforcing existing ones or establishing clear and simple regulations, with the ultimate objective of strengthening the contracting process and the execution of this type of loans.
This Technical Note summarises the amendments introduced by the Proyecto de Ley, comparing them with the provisions established in the current legislation.
Executive summary
The Proyecto de Ley introduces amendments on scope, basic information to be included in advertisements and marketing materials of real estate loans, formal and material transparency measures, tying and bundling practices, remuneration policies of bank employees, conversion of mortgages in foreign currencies to euros, conversion of variable rate mortgages to fixed rate mortgages, early repayment, the declaration of early maturity, and interest on arrears.
Scope of application
This Proyecto de Ley shall apply to loan contracts granted by natural or legal persons where the borrower or guarantor is a natural person and the purpose of the contract is to grant mortgage-backed loans or other security rights in immovable property for residential use, or where the purpose of the contract is to acquire or retain ownership rights in land or immovable properties constructed or to be constructed, provided that the borrower is always a consumer.
Main content
- General provisions (purpose, scope and binding nature of the Law).
- Rules for the protection of the borrower (rules of transparency and conduct for responsible granting of real estate financing).
- Legal regime for real estate credit intermediaries, their representatives and real estate lenders.
- Sanctioning regime for lenders, credit intermediaries and their designated representatives.
Download the technical note by clicking here (only in spanish).