La Bank of Italy calls the lenders to order variable mortgage rates. In recent days, writes MF today, Via Nazionale sent a communication to the banks asking them to adapt – if they have not already done so – to the new market context.
In particular, some institutes they would not have taken into account the fact that interbank rates such as the Euribor have fallen into negative territory as a result of the ECB's expansionary monetary policy. These values are used by banks as a basis to which a spread can be added to determine the final rate to be applied to customers: therefore it is clear that - if the starting value is negative - the final rate must be lower than the spread.
Numerical example: with a 1% Euriobor and a 2% spread, the final rate is 3%; yesterday, however, the Euribor was at -0,17%, therefore, adding the same spread, the customer rate must not exceed 1,83%. Some banks, however, would have set the minimum level ("floor") of the reference rate to zero to which the spread would be added, differently from what was provided for in the contracts. Consequently, they would be applying to their clients gods higher than expected interest rates.
“From some reports received hypotheses emerged in which the intermediaries (banks, ed) neutralized the erosion of the spread deriving from the negative value of the parameter, attributing a value equal to zero to the latter. This resulted in the application of interest rates that were not in line with the respective contractual provisions”.
For this reason, the Bank of Italy has asked institutions to intervene on three fronts:
1) comply with "a rigorous application of the conditions agreed with customers", or rather not unilaterally introduce minimum rate clauses not indicated in the contracts;
2) in the event that interbank rates fall negative, "verify that the applications and procedures in use correctly determine the interest rate applicable to each relationship and the amount of interest due";
3) carry out a "prompt verification of the conduct followed up to now in determining the interest due" and, possibly, "make provision for the consequent refunds" if minimum rates equal to zero have been applied. In these cases, it will also be necessary to send a report to Bank of Italy, which in the coming months will check that the requests contained in its communication have been respected.
