Farm Loan Rates Continue to Be Favorable
The Chicago Federal Reserve publishes a quarterly Ag Letter. The 2017 first quarter letter showed a chart summarizing the interest rates charged by banks in their system over the previous five quarters.
Interest rates on Operating Loans have ranged from a low of 4.87% in the third quarter of 2016 to a current high of 5.13%. Although this is up, it is only by about 27 basis points, which is probably a result of the Federal Reserve hike in December, 2016.
Feeder Cattle loans have ranged from a low of 4.95% (again in the third quarter) to the current high of 5.27%.
Real estate loan rates ranged from 4.57% in the second and third quarter of last year to the current 4.8% rate.
Although all of these rates are higher than a year ago, the net change is still fairly minor. As the Federal Reserve continues to raise rates, it will be interesting to see how these rates will continue to change.
Paul Neiffer is a certified public accountant and business advisor specializing in income taxation, accounting services, and succession planning for farmers and agribusiness processors. Paul is a principal with CliftonLarsonAllen in Walla Walla, Washington, as well as a regular speaker at national conferences and contributor at agweb.com. Raised on a farm in central Washington, he has been immersed in the ag industry his entire life, including the last 30 years professionally. Paul and his wife purchase an 180 acre ranch in 2016 and enjoy keeping it full of animals.
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