Evaluating Euribor Manipulation: Effects on Mortgage Borrowers

Rodríguez-López, Araceli; Fernández-Abascal, Hermenegildo; Maté-García, Jorge-Julio; Rodríguez-Fernández, José-Miguel; Rojo-García, José-Luis; Sanz-Gómez, José Antonio

doi:10.1016/j.frl.2020.101795

Cited by 3 publications

(5 citation statements)

References 22 publications

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“…In effect, the LIBOR, EURIBOR and MLRI have caused problems of abusiveness, manipulability and lack of transparency in those loans contracted from 2008. In the case of Spain, the MLRI has not been studied in depth, which makes it necessary to quantify the economic damage that could be caused to the injured parties (Rodríguez-López et al , 2021). The main objective of this article has been to quantify the excess of interests paid by consumers when applying the MLRI instead of the EURIBOR as well as to highlight the current situation of the problems that these interest rates have caused to consumers and the solutions proposed in the practice to solve the problem.…”

Section: Discussionmentioning

confidence: 99%

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Estimating the excess of interests paid by consumers when applying an upper rate. The case of Spain

Cruz Rambaud,

Ortega Perals

2024

SEF

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Purpose The framework of this paper is financial mathematics and, more specifically, the control of data fraud and manipulation with their subsequent economic effects, namely, in financial markets. The purpose of this paper is to calculate the global loss or gain, which supposes, for the borrower, a change of the interest rate while the contracted loan is in force or, in another case, the loan has finished. Design/methodology/approach The methodology used in this work has been, in the first place, a review of the existing literature on the topic of manipulability and abusiveness of the loan interest rates applied by banks; in the second place, the introduction of a mathematical-financial analysis to calculate the interests paid in excess; and, finally, the compilation of several sentences issued on the application of the so-called mortgage loan reference index (MLRI) to mortgage loans in Spain. Findings There are three main contributions in this paper. First, the calculation of the interests paid in excess in the amortization of mortgage loans referenced to an overvalued interest rate. Second, an empirical application shows the amount to be refunded to a Spanish consumer when amortizing his/her mortgage loan referenced to the MLRI instead of the Euro InterBank Offered Rate (EURIBOR). Third, consideration has been made to the effects and the possible solutions to the legal problems arising from this type of contract. Research limitations/implications This research is a useful tool capable of implementing the financial calculation needed to find out overpaid interests in mortgage loans and to execute the sentences dealing with this topic. However, a limitation of this study is the lack of enough sentences on mortgage loans referenced to the MLRI to get some additional information about the number of borrowers affected by these legal sentences and the amount refunded by the financial institutions. Originality/value To the best of the authors’ knowledge, this is the first time that deviations in the payment of interests have been calculated when amortizing a mortgage.

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Section: Discussionmentioning

confidence: 99%

“…With respect to the EURIBOR, this rate can be manipulated according to market circumstances and according to the convenience of banks to demonstrate their solvency at any given time (Rodríguez-L opez et al, 2021). Moreover, the EURIBOR is mostly used for mortgage loan contracts and, therefore, affects consumers in this kind of loans.…”

Section: Literature Reviewmentioning

confidence: 99%

Estimating the excess of interests paid by consumers when applying an upper rate. The case of Spain

Cruz Rambaud,

Ortega Perals

2024

SEF

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“…2016; Eisl, Jankowitsch, & Subrahmanyam, 2017;Ghosh, Le Roux, & Verma, 2020;Rodriguez-Lopez et al, 2020;Taboga, 2014)). With respect to the latter stream of literature, Caporale and Gil-Alana (2016) documented no persistence in the monthly EURIBOR rates suggesting a non-representative benchmark for the unsecured money market.…”

Section: Literature Review and Novelty Of This Articlementioning

confidence: 99%

“…HSBC, ING, Deutsche Bank, National Bank of Greece, and Barclays) from January 2009 to December 2017 and found evidence that EURIBOR could be predicted in all five cases with different degrees because of a profound herd being observed. Rodriguez-Lopez et al (2020) tested for the existence of manipulation with respect to the 12-month EURIBOR and analyzed the impact on the mortgage market. Their findings suggest that there was a significant negative effect of the manipulative behavior on the mortgage market, with borrowers overpaying on interest.…”

Section: Literature Review and Novelty Of This Articlementioning

confidence: 99%

The EURIBOR and EONIA Reform: Achieving Regulatory Compliance While Protecting Financial Stability

Priem

Rie

2020

SSRN Journal

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Based on an extensive review of the academic and legal literature combined with a screening of news articles and policy papers, this article is the first to describe in great detail the events leading up to the EURIBOR reform and the efforts to make EURIBOR compliant with the European Benchmark Regulation. It documents the development of the hybrid EURIBOR methodology to ensure the benchmark to be anchored to transactions as much as possible thereby reducing manipulative behavior. The article further explains the actions undertaken by the administration and the EU RFR Working Group to transition from EONIA towards €STER and the reasoning behind the choice to recalibrate EONIA into €STER plus a spread. Although EURIBOR is considered BMR-compliant since 2 July 2019 and EONIA can continue to be used until 3 January 2022, this article explains why market participants should not be disincentivized to already take actions to provide for fallback rates to EURIBOR in their legal documentation, and to move away from EONIA. This study addresses various fallback methodologies. Contribution/Originality:This study is the first to provide a holistic overview of the reforms of the EURIBOR and the EONIA, as well as the on-going work to transition away from EONIA towards the Euro short-term rate (€STER). The study documents the efforts made by the administrator, the panel banks as well as by the FSMA to reform EURIBOR and to keep it operational, at least in the medium term. It explains the choice of the EU RFR Working Group and the administrator to recalibrate EONIA into €ster + a spread of 8.5 basis points. INTRODUCTIONSince the late 1960s, interbank offered rates (IBORs) have played a critical role in financial markets (see Hou and Skeie ( 2014)). Initially used in the syndicated loan market, IBORs are nowadays considered as interest rate benchmarks 1 that intend to represent the unsecured funding cost for financially sound banks in the interbank 1 In this article, a benchmark is defined as in article 3 of Regulation (EU) 2016/1011 of the European Parliament and of the Council of 8 June 2016 on indices used as benchmarks in financial instruments and financial contracts or to measure the performance of investment funds and amending Directives 2008/48/EC and 2014/17/EU and Regulation (EU) No 596/2014 ("BMR"). That is, it is an index by reference to which the amount payable under a financial instrument or a financial contract, or the value of a financial instrument, is determined, or an index that is used to measure the performance of an investment fund to track the return of such index or of defining the asset allocation of a portfolio or of computing the performance fees. An index is any figure that is a) published or made available to the public

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“…(Sixto et al, 2018). A tono con lo anterior el análisis debe dirigirse hacia aspectos, que desde la perspectiva martiana son válidos y se erigen, como fuente de imprescindible aplicación para la formación de un futuro profesional en Cuba (Rodríguez et al, 2021) a. La existencia de claves pedagógicas para la formación martiana del profesional de la educación parte de sus consideraciones, aseveraciones y afirmaciones teóricas sobre el carácter educativo del proceso de la formación del hombre nuevo; de un sistema de saberes generalizados y sistematizados a partir de determinados aspectos de la realidad política, económica, social y filosófica de Cuba y de América reflejados en su vida y obra.…”

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Revisión Narrativa: Un Enfoque Martiano a La Orientación Profesional-Vocacional De Los Jóvenes

Ramos-Morales,

Perez Borroto Vergel,

Ruiz-Moreno

et al. 2022

Psico Unemi

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La orientación vocacional-profesional no es un problema reciente, a través del tiempo, la sociedad ha tratado de que el individuo se ajuste a la profesión, como una de las cuestiones fundamentales para que obtenga mejores resultados en su actividad fundamental, el trabajo; por lo que este tema ha estado en el pensamiento de filósofos, sociológicos, psicólogos y pedagogos en general. La presente investigación parte de un paradigma interpretativo que tiene como objetivo profundizar en los valores morales y sociales que emergen de la obra pedagógica martiana. De acuerdo a los resultados del análisis, la práctica de la orientación profesional-vocacional ha tenido cambios notables desde su definición, alcance y proyección. En Latinoamérica se ha logrado una mayor conciencia sobre la importancia de dirigir esos esfuerzos de orientación, al desarrollo integral de la personalidad del joven, a estimular su capacidad de decisión mediante una adecuada información y autoconocimiento. Desde Cuba se desarrolla esta labor apoyado en el pensamiento de José Julián Martí Pérez, que enfatiza la formación integral de los jóvenes, sensibiliza con el perfil profesional del maestro entre otros, se concluye que este enfoque es importante en la sociedad a través de la orientación profesional-vocacional.

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Evaluating Euribor Manipulation: Effects on Mortgage Borrowers

Cited by 3 publications

References 22 publications

Estimating the excess of interests paid by consumers when applying an upper rate. The case of Spain

Estimating the excess of interests paid by consumers when applying an upper rate. The case of Spain

The EURIBOR and EONIA Reform: Achieving Regulatory Compliance While Protecting Financial Stability

Revisión Narrativa: Un Enfoque Martiano a La Orientación Profesional-Vocacional De Los Jóvenes

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