Even the world’s wealthiest people don’t go all-cash

More super-rich are turning to mega-loans instead of dipping into their equity

National /
Sep.September 20, 2018 05:15 PM

Beyonce, Jay-Z, and their Bel Air Mansion in Los Angeles (Credit: Pinterest and Getty Images)

A growing number of super-wealthy people are ditching the all-cash home buy.

Rather than dipping into their equity, David Koch, Beyoncé and Jay-Z, and Daryl Katz, the billionaire owner of the Canadian hockey team Edmonton Oilers, each have bought homes in recent years with massive bank loans. The trend has been attributed to real estate prices rising parallel to record-low interest rates, according to the Wall Street Journal.

There are reportedly 233 outstanding housing loans across the country that are valued between $10 million and $20 million. And they are being issued at an increasing rate: 23 percent of these loans were issued last year, and 16 percent have been issued this year already.

Banks see this as a way for pleasing their clients, some who hold tens of millions of dollars.

“If you have a client who has $50 million with your bank, you would do everything you can to keep them from taking that money out,” Jon Maddux, chief executive of California-based lender FundLoans, told the outlet.

Last year, Beyoncé and Jay-Z turned to Goldman Sachs for a $52.8 million mortgage they used to pay for their $88 million Bel-Air mansion. According to the outlet, they are making payments of more than $200,000 a month.

Katz is making similar repayments for a $47.45 million, 30-year mortgage he took out from UBS Bank earlier this year, which is being used to pay off his $85 million compound in Malibu, California.

Despite the trend, there are still those who forgo financing. In April, David Koch and his wife reportedly paid $40 million in cash for Joseph Chetrit’s Upper East Side mansion on East 76th Street. [WSJ] —David Jeans 


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