An interest adjustment clause in a loan agreement usually consists of a reference interest rate and an interest margin. Since reference interest rates are currently so low and with several indices even dropping below zero, it is possible that in sum the total interest rate drops to zero. However, according to the Supreme Court for Civil Matters, charging the consumer with the margin “in any event” violates the Consumer Protection Act. The bank is however at least not obliged to make payments to the borrower (“negative interest rate”). (8Ob101/16k)
Interest adjustment clauses: banks don’t get to keep the margin
