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Facebook founder Mark Zuckerberg’s new adjustable-rate mortgage started at 1.05 percent.

Loans to rich beat inflation

– Billionaire Mark Zuckerberg is giving new meaning to the term “the one percent.”

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

While almost all lending rates have reached historical lows this year, the borrowing costs available to high-net-worth individuals are even lower if the person is willing to bear the risk of monthly interest rate adjustments, said Greg McBride, senior financial analyst with Bankrate Inc., a North Palm Beach, Fla., firm that tracks interest rates.

Large increases are unlikely anytime soon with the Federal Reserve signaling it will keep interest rates near zero for at least two years.

“When you can borrow at a rate below inflation, you’re borrowing for free,” McBride said in an email. “This is the concept of using other people’s money, and it preserves financial flexibility for the borrower.”

“The one percent” is a phrase popularized last year by the Occupy Wall Street movement to protest growing U.S. income inequality. The top one percent of Americans earns a fifth of the country’s income and controls more than a third of its wealth, according to Joseph E. Stiglitz, a Nobel Prize-winning economist, whose book “The Price of Inequality” was published last month.

The average rate on a one-year adjustable mortgage was 2.69 percent on July 12, up from a record low 2.68 percent a week earlier, according to Freddie Mac, the McLean, Va.-based mortgage-finance company. The average rate for a 30-year fixed loan fell to a record low 3.56 percent on July 12. A report on Thursday showed the 30-year average had dipped again – to 3.49 percent. Freddie Mac doesn’t survey rates for loans that adjust monthly.

Zuckerberg, 28, is the world’s 40th wealthiest person, with a net worth of $15.7 billion, according to the Bloomberg Billionaires Index. His company went public in a $16 billion initial public offering in May. The shares were down 19 percent since trading began as of July 13.

Facebook spokesman Larry Yu declined to comment on Zuckerberg’s mortgage.

“We’re not going to get into the personal finances of executives,” he said in an email.

The Palo Alto house cost $7 million in March of last year, purchased in the name of a limited liability company, according to a deed filed with the Santa Clara County Clerk-Recorder.

Zuckerberg’s address was published by Palo Alto Online and Burbed.com, a Silicon Valley real estate blog. Three neighbors reached by phone at their homes said Zuckerberg lives at the address. They asked that their names not be used because of concerns for their privacy.

The five-bedroom, 5 1/2 -bath house was built in 1903 on a 9,011 square-foot lot, according to Redfin Corp. The two-floor white wood-sided home is ensconced behind a gated drive and a wall of groomed shrubbery, about three miles from Stanford University and three miles from Facebook’s Menlo Park headquarters. Zuckerberg was married to Priscilla Chan in the backyard May 19.

Homes in Zuckerberg’s ZIP code, 94301, sold for a median $1.875 million, or $968 a square foot, in June, up 1.7 percent from a year earlier, according to Redfin. Google co-founder Larry Page owns a home in 94301, and the late Apple founder Steve Jobs also lived there.

“There was a huge run up before the Facebook IPO and it cooled off after the Facebook fizzle,” Ken DeLeon, a Palo Alto real estate broker, said about local home prices.

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