Re:Netflix Made Record Profits in 2020, Paid a Tax Rate of L...
by JumpCrisscross on Monday April 05, 2021 @09:21AM
(#26698557)
> Let me introduce you to the HELOC
Home equity loans are predominantly used by middle income households [0].
The rich can borrow against securities at the call money rate, currently 2% [1]. Much cheaper than borrowing against real estate [2]. The less rich swap it to a fixed rate for added security; the richer take the rate risk. (They likely have natural hedges.) The super rich seek to borrow at or close to the SOFR [3], typically having Treasuries or similar structured products for the purpose. (If they have a business with float, that could be even cheaper than SOFR.)
Home equity loans are predominantly used by middle income households [0].
The rich can borrow against securities at the call money rate, currently 2% [1]. Much cheaper than borrowing against real estate [2]. The less rich swap it to a fixed rate for added security; the richer take the rate risk. (They likely have natural hedges.) The super rich seek to borrow at or close to the SOFR [3], typically having Treasuries or similar structured products for the purpose. (If they have a business with float, that could be even cheaper than SOFR.)
[0] http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.574...
[1] https://www.bankrate.com/rates/interest-rates/call-money.asp...
[2] https://www.bankrate.com/home-equity/heloc-rates/
[3] https://apps.newyorkfed.org/markets/autorates/SOFR