Zero clause


Clause zero is a mortgage contractual clause according to which the bank guarantees that the interest charged has a minimum of 0%. In this way, even with negative benchmark interest, the total interest charged will not fall below this value.

In a simple way, what the bank does is protect itself against the drop in the reference interest rates, normally the Euribor. Therefore, it affects mortgages with variable rates. Thus, if this interest takes negative values, the bank ensures a minimum profitability. Thus, if the rates are negative and we have a zero clause, the bank ensures that the interest is not less than 0%, since in this case, the entity should pay to lend money.

The legal problems of clause zero

It all started with the floor clause that prevented mortgage interest from falling below a certain value. The lack of transparency in the contracts, together with the economic crisis, led many users to sue their entity. The judges began to publish sentences in which this clause was declared illegal and that was the beginning of massive lawsuits. Everything ended up being corroborated by the Supreme Court, which established jurisprudence.

In clause zero the matter is somewhat more confusing. There are experts who consider that in this case there is no clear abuse. In fact, they consider that it may seem more like a just claim by the bank to ensure income from the provision of a service. In short, it is an option that, as long as it is voluntary, will depend on the parties. Of course, transparency, although it is greater than in the others, has to be given.

Floor clause example

It is very similar to that of the floor clause. It consists of establishing a limit for which the mortgage interest rates will not fall. Perhaps with an example it will be clearer. Imagine a fictitious situation in which the Euribor falls to -1.5%. This situation is more than unlikely, but it serves as an example.

Our bank charges us a differential of 1% on that Euribor. In this way, when adding both, we have a total interest of -0.5%. The bank should pay us. It may seem like good news, but in this situation what would happen is that no one would be willing to lend money. This zero clause guarantees the bank that at least the interest rate will be 0% and we will only pay the principal of the loan.

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