Russian billionaire is among the ultra rich taking out huge home loans on NYC properties to access cheap credit after he arranges a $42 MILLION mortgage on penthouse he bought for his daughter
A Russian billionaire is allegedly among the ultra rich taking out massive loans on New York City properties to access cheap credit.
Dmitry Rybolovlev took out a $42 million mortgage in June on the penthouse at 15 Central Park West he bought for his daughter, Ekaterina, in 2011.
Bloomberg reports that the interest rate from from JPMorgan Chase & Co is just 2.9 percent so payments average out to approximately $177,000 per month.
Banks and other lenders have been providing several millionaires and billionaires with credit at low rates amid the COVID-19 pandemic.
This allows them to use the borrowed money to make several investments including in cryptocurrencies such as Bitcoin and stock markets.
Dmitry Rybolovlev (left) took out a $42 million mortgage in June on a Manhattan penthouse he bought for his daughter, Ekaterina (right), in 2011 for $88 million. When the family could not sell the home a few years ago, they decide it would be more useful to use the apartment as way to get borrowed money at a cheap rate.
The interest rate is just 2.9% so Rybolovlev's payments average out to approximately $177,000 per month. Pictured: 15 Central Park West where Rybolovlev bought an apartment for his daughter
The 35-floor luxury condominium known as 15 Central Park West is located on Manhattan's famed Upper West Side.
It is home to some of the world's most famous actors, athletes, CEOs, hedge fund managers and billionaires.
Current and former residents include Robert de Niro, Denzel Washington, Alex Rodriguez, former Barclays CEO Robert Diamond Jr, former Citigroup CEO Sandy Weill and the Rybolovlevs,
In fact, Rybolovlev purchased the 6,744-square-foot penthouse to the tune of $88 million from Weill, according to Bloomberg.
At the time, paying the full asking price for the home set a new record in New York City history.
The New York Times reported that Ekaterina stayed there while completing her degree at Harvard University Extension School.
According to Bloomberg, the Russian family tried to sell the apartment but to no avail, so they decided it would be more useful to use the apartment as way to get borrowed money at a cheap rate.
The ultra-wealthy are now refinancing in order to reduce monthly payments, lower interest rates and acquire credit.
'Rates are low and so clients are looking to take advantage, using some form of debt to be able to access cheap money,' Casey Kriedman, managing director of wealth management at The Broad Group, told Bloomberg.
The US Mortgage Bankers Association finds that the number of home loans totaling at least $766,000 or more has risen more than 66 percent over the last year, according to the news outlet.
Rybolovlev is one of many billionaires that are taking out large loans on properties in New York City to access cheap credit. Pictured: Rybolovlev (left) and his daughter attend the French Ligue 1 soccer match in Paris, France, March 2016
This allows the ultra rich to use the borrowed money to invest in stock markets and other ventures such as cryptocurrency. Pictured: 220 Central Park South where hedge fund founder Dan Och also has an apartment on which he took out a recent mortgage
Through publicly available mortgage data, Bloomberg found several millionaires and billionaires taking out loans on expensive properties.
Hedge fund founder Dan Och obtained a $50 million mortgage in April for an apartment at 220 Central Park South, colloquially knows as Billionaire's Row, he bought last year.
Meanwhile, businessman Drew Katz acquired a $15 million mortgage in August for a a penthouse he purchased for $22 million just four years ago.
This trend is not just occurring in New York City.
Bloomberg reports that massive home loans have been taken out in Los Angeles, San Francisco and even London.
'In reality, the richer you are the more you borrow,' Remi Frank, global head of key client group wealth management of BNP Paribas wealth management's told the website.
'And the banks are happy to lend to very rich people.'
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