December Fed Meeting Preview: Secure Short Term Financing Now
With the Federal Reserve meeting once again on December 13 to set rates, there’s a very good possibility that we will see yet another rate hike increase. However, FBN®’s experts are predicting that it will be an increase of 50 basis points which is less than the last few rate hikes.
With recent inflation showing signs of moderating, the Fed is expected to increase rates at a slower rate in order to try to stabilize the state of the economy. Even though some think inflation is starting to slow more quickly than expected, it doesn’t mean that markets won’t continue to be unpredictable and volatile. No matter what the Fed decides to do, it’s difficult to predict how the market will react.
Interest rates have dropped in the past few weeks and it may be a good time for farmers to consider locking into shorter term financing now and refinance for a longer term in the near future.
[Learn more about how the economic shocks of 2022 are affecting farmland values in our recent FBN Research report. Unlock the free report today.]
What it means for farmers
Farm land real estate continues to be a good long-term investment especially if rates are starting to drop.
“Longer-term land rates will continue to come down over time and locking in rates for a shorter period of time just makes sense now,” says Dan English, General Manager of FBN Finance.
Kevin McNew, Chief Economist at FBN, sees 2023 as potentially a good year for profitability but more modest than 2021 and 2022. “My message is that farmer profitability should still be robust, but cost increases in the past few years will make it critical to explore input decisions and strategic investments that improve farm finances.”
When it is time to think about financing, it’s good to choose a lender that will not only allow you to buy now and refinance later but one that doesn’t penalize you for prepayments if, and when, rates do come down. FBN Finance does not have any prepayment penalties which helps your operation remain flexible and profitable.
With the markets being unpredictable, locking in a shorter term like 7 or 10 years may be a good option for some farmers. The incentive to lock in a shorter term rate now with the option to refinance means you will still have the option to take advantage of lower interest rates down the road. If you’re considering this option, check out our competitive land loan and operating line rates which offer flexible term options.
With the economy still being in a volatile state we understand it might feel complicated when thinking about what the next right steps are. But when a piece of property you want to buy becomes available we know there is no time to waste.
At FBN Finance we provide you options in order to get customized financing for your operation. If you are expecting you will refinance or purchase more land in the near future then variable rates may make sense and you may be able to lock in rates for 1 month to 15 years.
If you are looking for predictability with your payments and budgeting then you may focus on our fixed rates that start at 7 years. Either way, we are here to provide options so you can feel confident in your decision.
Solutions to grow your business
Every farmer has a unique situation and we aim to make financing for family farmers simple and affordable. We provide a variety of options that may be useful in managing or growing your operation:
Operating lines will help you fund your operation as you see fit. With inflation impacting everyone, capitalizing on FBN’s special offer of 0% interest* on inputs may help you maximize your profit potential. To qualify for this offer you need to both complete the closing process for the operating line and have a FBN Direct® minimum purchase of $45,000 by December 9, 2022. Apply today and get your approval decision instantly. Once you’ve been fully approved for your line of credit, you can easily use it to pay for FBN inputs in our Direct store.*
With rates seeing some relief lately, now may still be a good time to purchase that Ag land you have your eyes on. We want to help you finance your Ag land, apply for a land loan now.
Farmland Capital provides you the capital you need without impacting your original loan. Learn more here or start your application today.
Disclaimer: The material provided is for educational purposes only. It is not intended to be a substitute for specific individualized tax, business, legal, investment or professional advice. Where specific advice is necessary or appropriate, consult with a qualified tax advisor, CPA, financial planner, or investment manager. Neither Farmer's Business Network, Inc. nor any of its affiliates makes any representations or warranties, express or implied, as to the accuracy or completeness of the statements or any information contained in the material and any liability therefore is expressly disclaimed.
Financing offered by FBN Finance, LLC and its lending partners. Terms and conditions apply. To qualify, a borrower must be a member of Farmer’s Business Network, Inc. and meet all underwriting requirements. Interest rates and fees will vary depending on your individual situation. Not all applicants will qualify.
Copyright © 2014 - 2022 Farmer's Business Network, Inc. All rights Reserved. The sprout logo, “Farmers Business Network”, “FBN”, “FBN Direct” are trademarks or registered trademarks of Farmer's Business Network, Inc. Products sold or distributed through FBN Direct are offered by FBN Inputs, LLC and are available only in states where FBN Inputs, LLC is licensed and where those products are registered for sale or use, if applicable. Please check with your local extension service to ensure registration status. FBN Direct pharmacy products and services are offered by FBN Pharmacy LLC and are available only in states where FBN Pharmacy LLC is licensed. Terms and conditions apply.
*Qualified farmers who are approved and close an Operating Line of Credit through FBN® Finance of $250,000 to $1,000,000 between September 1, 2022 - December 9, 2022, make a minimum purchase of $45,000 from FBN Direct® and payoff the balance in full by March 31, 2024 are eligible to receive a promotional interest rate of 0% when using the Operating Line of Credit to finance purchases of input products made through FBN Direct® between September 1, 2022 - August 31, 2023. Qualifying input products include crop protection, adjuvant, crop nutrition, seed, animal health and livestock feed. Advances on the FBN® Finance Operating Line that are not for the purchase of input products from FBN Direct® will be charged interest at the stated (non-promotional) contract rate in the Operating Line of Credit loan agreement.*
Approved farmers who close a FBN® Finance Operating Line and make a minimum $45,000 purchase from FBN Direct® by December 9, 2022 will receive the benefit of automatic qualification for the 0% Club from FBN Direct®. The 0% Club offers qualified farmers a promotional rate of 0% interest on purchases of input products only made through FBN Direct® between January 21 - August 31, 2023. Qualifying input products include crop protection, adjuvant, crop nutrition, seed, animal health and livestock feed.
*Payments for all amounts owed under the associated FBN® Finance Operating Line of Credit are due March 1, 2024. If the total balance for all amounts owed is not paid in full by March 31, 2024, interest charges on all purchases of input products made through FBN Direct® between September 1, 2022 - August 31, 2023, using an Operating Line of Credit through FBN® Finance will be imposed from the purchase date at the stated (non-promotional) contract rate in the Operating Line of Credit loan agreement.
FBN Direct products and services and other products distributed by FBN Direct are offered by FBN Inputs, LLC and are available only in states where FBN Inputs, LLC is licensed and where those products are registered for sale or use, if applicable. If applicable, please check with your local extension service to ensure registration status. Nothing contained on this page, including the prices listed should be construed as an offer for sale, or a sale of products. All products and prices are subject to change at any time and without notice. Terms and conditions apply.