Facebook’s Zuckerberg refinances home at 1.05 percent

Feeling pretty good about snagging a refi rate in the 3s, aren’t you?

Think you got a deal, don’t you?

Then listen to this, from Bloomberg: Mark Zuckerberg (you know, the guy in that movie who founded something called Facebook … worth a few mill, er, billion) just landed a 30-year adjustable rate mortgage at the rate of … 1.05 percent.

1.05 percent!

Now this begs a question or two. The first of which may be why a guy with such a stash of cash doesn’t just pull out his wallet and start peeling off hundreds, or whatever, and pay the thing off right then and there.

All right, so his manse in Palo Alto, Calif. cost $5.95 million … still, the guy’s worth nearly $16 billion.

The reason is basic economics. Getting to borrow that much at that low a rate _ sub-inflation _ is like getting the money for free. And the Big Z can get it because he’s a high net worther who is willing to pay a higher rate if the ARM spikes upward. Lots of folks wouldn’t want to take such a chance nowadays.

Here’s a summary of the situation from the report:

While almost all lending rates have reached historical lows this year, the borrowing costs available to high-net-worth individuals are even lower if the person is willing to bear the risk of monthly interest rate adjustments, said Greg McBride, senior financial analyst with Bankrate Inc., a North Palm Beach, Fla.-based firm that tracks interest rates. Large increases are unlikely anytime soon with the Federal Reserve signaling it will keep interest rates near zero for at least two years.

“When you can borrow at a rate below inflation, you’re borrowing for free,” McBride said in an e-mail. “This is the concept of using other people’s money and it preserves financial flexibility for the borrower.”

Just what Zuckerberg needs, more financial flexibility.

14 comments Add your comment

Old Devil

July 16th, 2012
11:36 am

First! But it doesn’t matter. It’s not like it’s Mark Bradley’s blog or something important.

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Sam the Sham

July 17th, 2012
9:53 am

TAX HIM. EAT THE RICH!!!

An't America great!

July 17th, 2012
11:36 am

Enter your comments here

Fredrick Setser

July 17th, 2012
11:38 am

An’t America great!

MMs

July 17th, 2012
12:16 pm

And the rich get richer.

MMs

July 17th, 2012
12:16 pm

Enter your comments here

PMC

July 17th, 2012
3:27 pm

Why should I care what someone elses mortgate rate is? Good for him.

Doesn’t really affect me at all.

Evidently his "liquidity"...

July 17th, 2012
4:12 pm

…is not good, as his $16B is all stock, though I hardly doubt he really needs any kind of loan to cover a $5.6mil loan. But, good business sense is what helped him get the stock value…

SheeshLouise

July 17th, 2012
4:40 pm

Mark Zuckerberg obviously does something like this for no other reason than to be a prick. Nothing more than to rub people the wrong way. It’s his way of corraling his very own stable of “wealth enviers” I guess.

Who Me?

July 17th, 2012
5:15 pm

why is it newsworthy what Mark Zuckerberg’s mortgage interest rate is? Any high net-worth individual can and will do the same thing. This has nothing to do with the rich getting richer, it’s just smart business that any other individual in this category can take advantage of. Get over it people…

propertymesh

July 19th, 2012
6:16 am

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Midtown

July 19th, 2012
5:30 pm

In case nobody has noticed, it’s expensive being poor in this country. The wealthy get breaks they don’t need and those of us who USED to be middle class, pay more just because we have to.

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