FACUA asks the Competition Authority to monitor for possible increases in mortgage prices

Given the possibility that the banking sector will make concerted efforts to compensate for the reduction in their profits resulting from starting to pay the mortgages tax.

FACUA asks the Competition Authority to monitor for possible increases in mortgage prices

FACUA-Consumers in Action has made a submission to the National Markets and Competition Commission (CNMC, according to its initials in Spanish) in which it requests that it monitor for possible increases in the price of mortgages, after the Government approved a change in legislation last Thursday which will make the banks responsible for paying the tax on document duties (applied to mortgages).

The association predicts that it is very likely that to compensate for the cut in their profits due to having to pay document duties taxes the banks will make their mortgages or other services more expensive. In this regard, it must be noted that although the sector has quite a margin of freedom to increase these prices, that different banks cannot come to agreements to apply increases in the same way, given that this could incur a violation of the law on protection of competition.

In any case, FACUA warns that the cost represented by the tax -between 0.5 and 1.5% of the loan’s value, depending on the region- does not have to translate to large increases, given that it will be absorbed with a light increase in the type of interest on the loan, for example.

The banks are responsible for paying the tax on all loans presented as public deeds from 10 November, after the publication in the Official State Bulletin a day before the Royal Decree-Law 17/2018, of 8 November, which changes the law on the tax on property transfers and document duties.

In its only article, the regulation introduces modifications in the cited law. Specifically, it modifies Article 29 which is written as such: "The taxpayer will be the purchaser of the good or right and, failing that, the persons who urge or request the notary documents, or those in whose interest they are issued. When it is a case of loan deeds with a mortgage guarantee, the taxpayer will be the moneylender".