Current interest rates!

[Wi transplant]

Just wanted to give a heads up to everyone! I closed on a new farm this week and financed thru farm credit and current 20 yr loans are now 8.4 pct on land!! Hoping interest rates will drop prior to election so i can refinance! Just a heads up to anyone looking at land and wondering about rates!

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[IowaBowHunter1983]

Just wanted to give a heads up to everyone! I closed on a new farm this week and financed thru farm credit and current 20 yr loans are now 8.4 pct on land!! Hoping interest rates will drop prior to election so i can refinance! Just a heads up to anyone looking at land and wondering about rates!

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Doesn't FCS have a 1% fee/penalty to refinance/payoff within 12 months?

 

[Wi transplant]

Doesn't FCS have a 1% fee/penalty to refinance/payoff within 12 months?

Yes you have to wait 1 yr to pay off or refinance but im eligible end of sept next yr . Figure rates will be down buy then. (I hope)!

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[Jerry Gille]

Congrats on the new place! I am jealous.

 

[Hardwood11]

Just wanted to give a heads up to everyone! I closed on a new farm this week and financed thru farm credit and current 20 yr loans are now 8.4 pct on land!! Hoping interest rates will drop prior to election so i can refinance! Just a heads up to anyone looking at land and wondering about rates!

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Wow
That changes things a lot ! Last I checked was 7% which is high, but if we get 8 or 9% that will impact the market, it just has to !

 

[8bitnes]

Wow
That changes things a lot ! Last I checked was 7% which is high, but if we get 8 or 9% that will impact the market, it just has to !

We are about to head into a recession; so I can't see rates climbing much more than another 0.25% unless the US credit rating gets hit again from the debt ceiling debacle. Reason being, with 45 million people resuming student loan payments this month, that is a lot of spending that will have to be removed from the economy.

 

[Hardwood11]

I think rates will drop by next year . Remember the government has to pay that rate on debt too !

 

[JNRBRONC]

Saw ag land for sale near me. Good flat ground 100% tillable. Asking $17K/acre. No way at that price and current interest rates. I think they are trolling.


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[hillrunner]

Saw ag land for sale near me. Good flat ground 100% tillable. Asking $17K/acre. No way at that price and current interest rates. I think they are trolling.


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That listing wouldn't last through the 1st morning up here.

 

[deerdown]

Congrats on the purchase! 8.4%,, wow... out of my league..
I've read something about FSA loans at 3%,50/50 with bank, up to 600k? What's this all about?
I might consider this for my next purchase if I heard this right.

 

[Wi transplant]

Saw ag land for sale near me. Good flat ground 100% tillable. Asking $17K/acre. No way at that price and current interest rates. I think they are trolling.


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Just had a 120 acre tillable farm west of Oskaloosa go fo 18k acre this week!!!!

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[T_Max]

Congrats on the purchase! 8.4%,, wow... out of my league..
I've read something about FSA loans at 3%,50/50 with bank, up to 600k? What's this all about?
I might consider this for my next purchase if I heard this right.

There is a quite a bit of paperwork to make that happen. If you are even thinking about thinking about it I would talk to the FSA now and see what you need to do.


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[Muskrat24]

Piece of some of best dirt in MO just sold for $34,800/acre on 115 acres couple weeks back. I work with a lot of lenders and land rates are 7.5% to 10+%.
FSA deal is good route if you can qualify. It is worth the time in paperwork and how much of a process that is will depend on the office you work with. 100% rec ground with no other farming interest or farming history unlikely to qualify.

 

[cchadww]

Just wanted to give a heads up to everyone! I closed on a new farm this week and financed thru farm credit and current 20 yr loans are now 8.4 pct on land!! Hoping interest rates will drop prior to election so i can refinance! Just a heads up to anyone looking at land and wondering about rates!

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Congrats on the new farm!!


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[Sligh1]

Like above said - FSA loans- lots of hoops. Worth it if u can qualify!!!

Here’s my wild guess….. I’d guess half the buyers on these tracts are cash buyers. Or if they borrow… they have vast amounts of land paid off. Prices & interest rates insane - they can clearly deal with it “no problem”.

Other 50% - Your average guy who is putting 30-40% down on a 1-3% roi farm…. “Working hard to make it work”. I personally think most those buyers are dropping off daily. MOST of these guys are out of the market. The ones remaining are dwindling.

This does 2 things - it will make wealthier buyers smell blood in the water & start to get a bit more cautious. 2nd, it sets us up for an “EVENT” to happen to pull both pools of buyers out. A recession for example- rec ground will slow way down. A big drop in grain- say corn settles at $4…. That’ll take some wind out of some guys sails. What the event are - who knows. But we one event away from big slow down. And as it is…. It’s slowing as it is. Doesn’t mean “collapse” or massive discounts.., means SLOWER. & IMO - it’s only gonna get slower.
If/when we get event or recession- buyers will pull back hard for a time. THAT is when to buy!!!!!! & IMO & speculation - if that happens…. BUY when it slows down (when folks don’t want to buy but when you SHOULD be buying) & “soon after” IMHO- rates will get cut and ground will start picking up steam again. Maybe im wrong but that’s exactly what im gonna do.

 

[IowaBowHunter1983]

Ok... I'll preface this by saying I don't want anyone here or otherwise to get hurt.

I'd like to see a massive reset. Crash would be welcome. We need some sanity back in market.

 

[8bitnes]

Like above said - FSA loans- lots of hoops. Worth it if u can qualify!!!

Here’s my wild guess….. I’d guess half the buyers on these tracts are cash buyers. Or if they borrow… they have vast amounts of land paid off. Prices & interest rates insane - they can clearly deal with it “no problem”.

Other 50% - Your average guy who is putting 30-40% down on a 1-3% roi farm…. “Working hard to make it work”. I personally think most those buyers are dropping off daily. MOST of these guys are out of the market. The ones remaining are dwindling.

This does 2 things - it will make wealthier buyers smell blood in the water & start to get a bit more cautious. 2nd, it sets us up for an “EVENT” to happen to pull both pools of buyers out. A recession for example- rec ground will slow way down. A big drop in grain- say corn settles at $4…. That’ll take some wind out of some guys sails. What the event are - who knows. But we one event away from big slow down. And as it is…. It’s slowing as it is. Doesn’t mean “collapse” or massive discounts.., means SLOWER. & IMO - it’s only gonna get slower.
If/when we get event or recession- buyers will pull back hard for a time. THAT is when to buy!!!!!! & IMO & speculation - if that happens…. BUY when it slows down (when folks don’t want to buy but when you SHOULD be buying) & “soon after” IMHO- rates will get cut and ground will start picking up steam again. Maybe im wrong but that’s exactly what im gonna do.

Our crop insurance guarantee was for $5.91/bushel so we are locked in with that as our floor.

 

[Sligh1]

Our crop insurance guarantee was for $5.91/bushel so we are locked in with that as our floor.

That’s really good!!!
What’s your feelings for how farmers across Midwest fair if we have sustained “$4 corn” for example? Clearly many be just fine. But- u feel like that will pinch those running tighter margins? Guys paying high cash rent. Newer farmers. Guys that don’t own a lot of ground & rent most.

 

[8bitnes]

That’s really good!!!
What’s your feelings for how farmers across Midwest fair if we have sustained “$4 corn” for example? Clearly many be just fine. But- u feel like that will pinch those running tighter margins? Guys paying high cash rent. Newer farmers. Guys that don’t own a lot of ground & rent most.

As you can see, $4 corn would be $2/bushel below the 2023 insurance guarantee and the average price we got for our 2022 crop was $7.10, so yet another $1+ from the year before that.

On better than average Iowa ground at 225 bushel/acre, our 2022 crop had revenue of $1600/acre, the 2023 crop gets $1300/acre. BUT, that same crop in 2024 would bring revenue of $900/acre. That's a lot of lost revenue. On a simple quarter section, that's $112,000 of revenue behind two years ago.

USDA estimated it cost $882/acre to raise corn from plant to harvest. That's a very slim margin and rent rates and loan rates both were up in 2023. Beyond land payment and input costs, they would need to have something leftover to pay themselves any wage. $18/acre leftover to pay the farmer is not good. 2024 is shaping up to be a very tight year.

 

[Muskrat24]

10%+ interest will be the event with lower commodity prices. Yes I know there is a PILE of cash out there but it is insane what some costs of living are right now for a household. The “haves” will be fine but the “have nots” will struggle. I agree with skip that we have already saw beginning farmers and hobby farmers priced out of the market. Inflation is real and food inflation is 10% to 20% plus. And just wait and see what happens to disposable interest when student loans come out of deferral….