Consumer protection in variable interest rate housing credit
Mariana Fontes da Costa
Housing credit; variable interest rate; negative interest rate; information duties; creditworthiness assessment; Decree-Law 74-A/2017.
This article focuses on some of the most important mechanisms foreseen in Portuguese Law for the protection of consumers in the framework of variable interest rate housing credit. For that purpose, it begins by analysing the dangers generated by the potential variation of the interest rate during the life of the contract and by assessing if the general legal limit regarding the maximum amount of interest rates chargeable within loan contracts applies to credit institutions in housing credit. It then evaluates the opposite scenario, questioning if there is a minimum limit from which the reference rate’s decrease will cease to be reflected on the interest rate applied. Finally, the article focuses on the new legal regime foreseen in Decree-Law 74-A/2017 of 23 June. Special attention will be given to the information duties vis-à-vis the borrower regarding the interest rate and the changes it may suffer, as well as the prohibition of engaging in contracts pursuant to a negative evaluation in a creditworthiness assessment of the consumer seeking housing credit.