Farm Loan Interest Rate Trends by Major Lender Groups

After many years of low to moderate interest rates, producers and lenders today are voicing concern about sustained higher rates and their effect on farm businesses. Starting in March 2022, as part of an effort to reduce the inflation rate to its long-term 2 percent target, the Federal Reserve began raising the federal funds rate. Increases in the federal funds rate increase farm borrowing costs, with year-over-year change in operator interest expenses rising 24 percent from 2021 to 2022 and 43 percent from 2022 to 2023 (USDA-ERS 2023). We begin this series on differences in interest rates across lenders, farm types and regions by examining historic trends in interest rates on newly originated farm debt by major lender groups.