Mortgage lenders have set aside billions of dollars for future defaults as millions of homeowners are in forbearance. This year, lenders have quickly tightened standards for average Americans, only dishing out loans to the ultra-rich.
JPMorgan is one bank that has temporarily stopped accepting new home equity lines of credit, or HELOC, applications due to a surge in delinquencies.
With ordinary folks unable to access cheap credit, even though rates are historically low, the ultra-rich, this year, have been collateralizing everything from artwork to New York penthouses to obtain cheap loans.
We first highlighted this phenomenon back in March, during the dark days of the virus pandemic, days after global equities crashed and credit markets locked up. We noted, "ultra-wealthy are increasingly requesting financing against fine art as a way to build liquidity."
So maybe, just maybe, over the past decade, the ultra-rich became massive asset gathers, using money that cost basically nothing, to purchase fancy artwork, million-dollar Ferraris, rare wine, and overpriced penthouses in top metro areas. That is, because, when shit hits the fan, these folks can leverage these assets to tap into cheap credit; and since these assets don't trade on major exchanges and price on a daily basis, aren't subjected to wild volatility swings.
Bloomberg is out with a report that JPM has issued a massive $42.5 million loan on an NYC penthouse owned by a Russian billionaire's family. The penthouse, at 15 Central Park West, is worth an estimated $88 million. Russian billionaire Dmitry Rybolovlev tried to sell the property but failed at finding a buyer, has decided to leverage the asset to tap into cheap credit, with an interest rate...