Bloomberg reports that billionaire Facebook founder Mark Zuckerberg got a 1.05 percent 30-year adjustable-rate loan when he refinanced his $5.95 million mortgage on his Palo Alto, Calif., home:
Zuckerberg is giving new meaning to the term “the one percent.”… While almost all lending rates have reached historic lows this year, the borrowing costs available to high-net-worth individuals are even lower.While banks are giving people like Zuckerberg sweet deals on mortgage rates, the rest of us are expected to pay for borrowed money. The average rate for a 30-year fixed loan is 3.59 percent.
As financial analyst Greg McBride said,
When you can borrow at a rate below inflation, you’re borrowing for free. This is the concept of using other people’s money and it preserves financial flexibility for the borrower.So why is someone like Zuckerberg who is worth almost $16 billion getting free money?
Banks like to provide home loans to high-net-worth clients because they can pay off the loan quickly, if needed, and are better credit risks, said Sandi Bragar, director of planning at San Francisco wealth manager Aspiriant.By moving his mortgage from Morgan Stanley to First Republic Bank, the 28-year old Facebook founder was able to reduce his monthly payments from $21,256 to $19,275 – pocket change for zillionaire Zuckerberg.
As Reuters reporter Felix Salmon wrote today:
When you’re rich enough to buy any number of homes you want for cash, a mortgage isn’t the same kind of financial product as it is for we mere mortals. Instead, it’s part of a suite of financial services and wealth management, which can cover everything from big-picture investment strategies to providing someone who’ll make sure your electricity bill is paid.While Zuckerberg enjoys his free money and five-bedroom mansion in California, some 700,000 homeowners in the state have defaulted on their mortgages and been told by the banks to take a hike. California has the highest foreclosure rate in the nation this month.
Kinda makes you wish the big banks would just "defriend" (or "unfriend"?) all of us and leave it at that.
-- Union Thug