Conversion of the variable interest rate to a fixed rate in mortgage loans as a remedy to rising interest rates after RD-Ley 19/2022

Abstract

The economic crisis triggered by the pandemic and the war in Ukraine, together with the continued rise in inflation, led to a rapid increase in interest rates and, consequently, in mortgage loan repayments. The legislator, through Royal Decree-Law 19/2022 of 22 November, which establishes a Code of Good Practice to alleviate the rise in interest rates on mortgage loans on primary residences, has sought to introduce mechanisms to alleviate the burden of these rises for families and SMEs. To this end, some reforms have been introduced in the regime of novation and subrogation as mechanisms that allow the substitution of a variable interest rate for a fixed rate, while at the same time attempting to reduce their costs by means of limits on the commissions, taxes and fees that burden these operations. This article analyses the new legal regime for novations and subrogations involving a change from a variable to a fixed rate, given that after the reform the regulatory landscape governing these institutions is particularly complex, as it is made up of a set of rules with partially intersecting areas of application.