Mark Zuckerberg likes Barclays London Money Market Desk

A bit of digging by the SF Chronicle has turned up the details of Mark Zuckerberg’s recent mortgage refinancing

The headline rate is 1.05%, but don’t get carried away. Here’s the details: 

The Facebook founder refinanced a $5.95 million mortgage on his Palo Alto home with a 30-year adjustable-rate loan starting at 1.05 percent, according to public records for the property.

[…] Zuckerberg’s 30-year mortgage started with an initial rate in May of 1.05 percent, which also is the minimum rate for the loan, according to a document filed with the Santa Clara County clerk’s office.

It adjusts each month with interest payments calculated as the London interbank offered rate, plus 0.8 percentage point. The maximum rate cannot exceed 9.95 percent.

He took the mortgage from SF-based First Republic Bank, which is renowned for two things: having a _long_ list of well-heeled tech-mogul mortgage customers; and giving out fresh cookies

You might wonder why a multi-deca-billionaire Zuckerberg needs to take out a mortgage on his house; the answer is “he doesn’t, but the rate was too cheap to pass up”. Two telling quotes from the article: 

“Even if someone would be able to pay off that mortgage with cash or other assets, they don’t want to tie up their holdings in real estate because they may have access to other types of more attractive investments.”

“A lot of my tech clients are doing it. Those rates exist for clients who don’t need a mortgage. I tell them to enjoy the free money and pay it off when the rates spike up.”

And since the mortgage is pegged to Libor (it resets monthly at 1-month USD Libor plus 0.8%), we can probably expect to see Zuckerberg friending the Barclays London money-market desk on Facebook sometime soon