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Jul 26, 2023
Today, the Federal Reserve announced plans to raise interest rates again by 25 basis points to 5.5 percent. This is the 11th increase since March 2022, leaving interest rates at the highest level in 22 years. But what does this mean for farmers? With an unpredictable market still on the horizon, farmers looking to purchase farmland may want to weigh their financing options.
The Fed left rates unchanged in June for the first time in 15 months. However, despite seeing some recent relief from inflation, there is still concern that inflation could worsen if left unchecked.
With rates expected to continue to rise in 2023, will the Federal Reserve be able to avert the threat of a looming recession? With no meeting scheduled for August, we’ll have to wait until September to see the Fed’s next move.
In an FOMC statement released by the Federal Reserve today, the Committee justified its actions by claiming:
“The Committee will continue to assess additional information and its implications for monetary policy. In determining the extent of additional policy firming that may be appropriate to return inflation to 2 percent over time, the Committee will take into account the cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation, and economic and financial developments.” (1)
In a press conference this afternoon, Fed Chairman Jerome Powell said,
“The process of getting inflation back down to two percent has a long way to go. We will continue to make our decisions meeting-by-meeting based on the totality of the incoming data and their implications for the outlook for economic activity and inflation, as well as the balance of risks. We remain committed to bringing inflation back to our two percent goal and to keeping longer-term inflation expectations well anchored.” (2)
With an unpredictable and volatile market still a concern, determining the best path forward for financing can be confusing. When farmland becomes available, it can be challenging to decide whether to buy now or later. While buying farmland can be a capital intensive investment, you’ll want to be prepared when that perfect piece of land becomes available.
While comparing lenders and rates is always wise, consider looking for a lender with no prepayment penalties. FBN Finance® offers customized financing options with no prepayment penalties and the flexibility to decide your next move.
Locking in a rate for five to 15 years with variable interest rates may make sense if you plan to refinance or purchase more farmland. But a more stable and predictable option may mean considering fixed rates that start at 10 years and go up to 30 years.
While every farmer’s situation is unique, FBN Finance aims to make the lending process straightforward and affordable. You can manage and position your operation for growth with various financing options.
AcreVision℠ is a farmland evaluation tool to help you research land before you buy, with free access to insights and metrics on various land parcels. With AcreVision℠, you’ll have all the information you need to help determine if a piece of land is a suitable investment for your operation.
FBN Finance is always looking for ways to make the loan process smoother and more efficient, so we now offer instant land loan approvals.*
With other lenders, waiting for a loan application decision can take 5-10 business days. That waiting period can be stressful and cause delays in important decisions for your operation.**
If you qualify for instant approval with FBN, your land loan application could potentially be approved within minutes for land loans up to $2.5 million.***
Click here to learn more about the land loan application process, complete the brief form below, or call 866-619-3080 to get started.
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*Approval is conditional and subject to the product’s terms and conditions, and underwriting.
**Length of time necessary to complete the financing process will vary and depend on one's individual circumstances.
*** Additional documentation may be required during the closing process.
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. NMLS ID: 1631119.
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Jul 26, 2023