As farmers consider their borrowing needs for 2021, now is the time to take action as interest rates are likely to rise.
“This is an opportunity to lock in the lowest rates we have seen in our lifetimes,” said Bill Lankswert, Director of Business Strategies with AgriFinancial. He says the key to interest rates is how quickly the U.S. economy recovers.
Lankswert forecasts that, as government spending on a stimulus package or other programs increases, rates will climb.
“Within two or three months after the election, we will begin to get a good indication. That should give you a time frame that you have to work with.”
He advised borrowers to lock in these low rates for as long as they can.
“Most banks will not lock in a rate longer than 5 years; but, if you plan to operate you farm for the long run, you might want to try and lock in these rates for a longer period of time.”
Lankswert also suggests this may be a time to do a little rate shopping.
“This spring you could have gotten a rate of 3.5%. If in 2021 that jumps to 4.5% on a 20 year loan, it will increase your payment by $6000 and the value of that loan over 20 years will increase by $100,0000.”
For more details, contact your current lender or visit CGB-agfi.com.
