Understanding Spanish Floor Clauses

What is a Floor Clause?

A floor clause, also known as a “Clausula Suelo,” is a provision that is included in most Spanish mortgages as an agreement that sets a minimum interest rate. Even if the official interest rate drops, the mortgage interest rate won’t fall below this set floor, which in turn leads to higher payments for homeowners.’

The Impact on Mortgages

Floor clauses are typically tied to a variable interest rate, like the Euribor (Euro Interbank Offered Rate)—the average interest rate at which European banks lend to each other. This connection meant that despite lower market rates, those with floor clauses in their mortgages didn’t benefit from these reductions.

Compensation

Eligible borrowers can reclaim the difference between the floor rate and the actual interest rate for the duration it was below the floor rate, including compensatory interest.

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