Fixed-rate mortgage swaps: ASUFIN warns of suspicious practices

In view of the trend of changes in fixed-rate mortgages, the Association of Financial Users (
ASUFIN
) has issued a warning. All this because it detected bad practices in the banking sector.

The entity disclosed some suspicions of non-compliance with binding offers by banks. These would be applying some strategies to circumvent the Mortgage Subrogation Law.

In summary, ASUFIN accuses that the deadlines set by the binding offers in these processes are not being respected. In this way, banks would be raising interest rates to customers.
This wrongdoing generates greater concern than that caused by the rise in the Euribor among those affected. This situation leads to defenselessness and insecurity among mortgagors.

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ASUFIN President speaks out strongly on the issue

These cases of irregular changes in fixed-rate mortgages, Patricia Suárez, president of ASUFIN, said, are reiterative. Complaints about the issue have increased.

“There is an increase in complaints from people who have an offer from the entity that is valid for 30 to 60 days, and it is surprisingly withdrawn before the end of the time.”

ASUFIN points out among the reasons that banks take on more clients than they can cover. Thus, when the quota is exhausted, the offer is downgraded for future customers.
Clients receive a fixed rate offer option of 1.95%, and then it is changed to 2.55% before the end of the term. A change made without having completed the minimum established term.

Subrogations and significant hindrances

The ASUFIN alert also highlights the detection of “hidden” subrogations and the “hindering” of novations. Specifically, it is denounced that:
Banks are avoiding subrogations, the most beneficial for the consumer due to cost savings, in favor of consolidating new market captures.

Generation of obstacles in novation (changes made by the client’s own entity) with entities that do not offer conditions and envy the procedure.

Faced with such dishonest practices, the association proposes a modification of the legislation on subrogations and novations. It focuses its proposal on establishing a time limit that makes it difficult to counter-offer.

In conclusion, ASUFIN considers the current term to be an advantage for banks that hinders the functioning of the mortgage market.

ASUFIN’s proposal to the European Banking Authority (EBA)

The proposal to “financially relieve the sector” that ASUFIN has made to the EBA is timely. It focuses on:
Increase in interest rates for households.
Facilitation of the change from variable to fixed mortgages or moratoriums at zero cost.

Thus, the association indicates that banks should facilitate mortgage renegotiation. It also believes that a strict good practice guide should be drawn up for this purpose.

ASUFIN has urged that changes to fixed-rate mortgages should not involve processes that make loans more expensive. This is in reference to the Annual Percentage Rate (APR) products.
This proposal is based on collaboration between the economy and banking. The focus is on debt mitigation and exploration of moratoriums.

ASUFIN’s influence in the mortgage sector

The fact that ASUFIN is speaking out on the case of fixed-rate mortgages is enough. Since it is a highly respected consumer advocate for financial products.

Its management has recently been recognized by the Bank of Spain and the National Securities Market Commission (CNMV). Especially for its commitment to financial consumer protection.