Understand your payments before buying land.
Dec 14, 2022
With the Federal Reserve meeting today to set rates, we’re entering all too familiar territory to end 2022. While our FBN® experts recently predicted that farmers should brace for another increase in interest rates, it comes as no surprise that a fifth increase in less than 8 months was announced.
With an increase of only 50 basis points, the Fed is slowing its aggressive approach to rate hike increases. With recent inflation showing signs of slowing down, some experts are speculating that inflation is slowing more quickly than expected but there is still work to be done.
“The statement by Fed Chair Powell suggests there is still a long way to go before we see interest rates pulling back. A modest downgrade in inflation is positive, but recent readings at 7%, well above the 2% Fed target. suggest a stiff headwind for the Fed as they fight systemic inflation in food & energy prices. Furthermore, the labor market still remains strong with low unemployment and recent job gains,” said Kevin McNew, Chief Economist at FBN.
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While the Fed is intent on bringing inflation down, the economy will continue to be unpredictable and volatile. Despite volatility, it’s still a good time for farmers to evaluate their financing options.
[Learn more about how the economic shocks of 2022 are affecting farmland values in our recent FBN Research report. Unlock the free report today.]
Our experts still strongly recommend looking at farm land as an investment. Farm land real estate will continue to be a good long-term investment if rates start to drop.
Choosing a lender that will not only allow you to buy now and refinance later without penalizing you for prepayments is a smart strategy for financing options. If and when rates do drop, you will have confidence knowing FBN® Finance does not have prepayment penalties. Our goal is to always help your operation remain flexible and profitable.
Locking in for a shorter 7-10 year rate may be a good option for farmers who view the markets as unpredictable. Locking in a shorter term rate now has the potential benefit of being able to refinance and take advantage of lower interest rates in the future.
If this is the right option for you, our competitive land loan and operating line rates offer flexible term options.
As the market continues to fluctuate with unpredictable volatility, it may be confusing and complicated when determining the best path forward for financing. And when land becomes available, it’s not always easy to sit and weigh your options of buying or not buying now.
That’s why our customized financing options provide you the flexibility to decide your next move. Locking in a rate for 5 years to 15 years with variable rates may make sense if you’re planning to refinance or purchase more land in the near future.
But if you’re looking for a more stable and predictable option with your payments and budgeting, you may want to consider a fixed rate that starts at 10 years.
No matter what situation you’re in, FBN Finance is here to help you better understand the options available to make you feel confident in your decision.
We aim to make financing for family farmers simple and affordable. Every farmer has a unique situation therefore 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. Get 0% interest on FBN Direct® inputs purchased by January 20, 2023. Apply today and get your approval decision instantly. Once you have your line, you can easily use it to pay for FBN inputs in our Direct store.
Even though rates are high, the market is predicting they will rise even higher. Now may still be a good time to purchase that Ag land you have your eyes on. We want to help you finance your expansion, 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.
Source: Minutes from the December 2022 Federal Reserve Meeting
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*Financing offered by FBN Finance, LLC and its lending partners and is available only where FBN Finance, LLC is licensed. Terms and conditions apply. To qualify, a borrower must be a member of Farmer’s Business Network, Inc. and meet all underwriting requirements of FBN Finance, LLC and its lending partners. Interest rates and fees will vary depending on your individual situation. Not all applicants will qualify.
Dec 14, 2022