Land Interest Rates Update 2021
Farm Credit of Northwest Florida is headquartered in Marianna, Fl with offices in Milton, Monticello, Jay and Tallahassee with a mission of “Helping Rural America Grow”. As a cooperative lender, excess profits (above capitalization and operating needs) earned by Farm Credit of Northwest Florida are refunded to the members. This profit sharing provides members the opportunity to lower the cost of borrowing below already competitive land interest rates. This unique structure may also save members money on closing costs.
Farm Credit realizes that “one size lending doesn’t fit all” so they offer options for land interest rates, terms and repayment, including no prepayment penalties and no acreage limitations. For most loans, if interest rates fall, your lender can work with you to lower your rate with no hassle and no costly refinance.
Logan Chappell is a loan officer at Farm Credit of Northwest Florida and works out of the Marianna office. He specializes in all types of properties, including agricultural, recreational, timberland, row crop land and cattle.
Chappell says that demand has been strong in 2020 and believes that it will stay strong through the first quarter of 2021 and property values have remained constant. When it comes to what type of property buyers are inquiring about, Chappell said that recreational land is “hot”.
“There definitely is a focus on timberland and timberland that has a little bit of pasture or cropland on it and most of it is going to be used as recreational property,” Chappell said. “Specifically, undamaged timberland is a big thing. We’ve had several hurricanes come though so timber properties with minimal damage are really getting a lot of interest right now.”
When it comes to the type of loans available, Chappell said he typically does long term fixed rate loans and tries to stay away from balloon loans.
“In a low-rate environment like we are in, you are going to get a better deal going with long terms,” Chappell said. “We can go up to 20 years on land and we require 20% down but you are also able to use additional collateral. So, if you are buying 100 acres if you own 20 or 30 acres free and clear you can use that to put up for the 20% instead of coming out of pocket for the down payment. We’ve got a lot of options.”
Chappell pointed out that the “patronage” refund that Farm Credit of Northwest Florida offers lowers the overall cost of the loan in terms of interest.
“In 2020, Farm Credit of Northwest Florida distributed $3.5 million back to our borrowers. So effectively, that’s reducing your cost of borrowing,” Chappell said. “It’s lowering your interest rate, because you’re getting back money that you paid in an interest.”
Current Land Interest Rates from Farm Credit of Northwest Florida (As of 5/14/21)
5 year – 3.85
7 year – 4.00
10 year – 4.35
15 year – 4.80
20 year – 5.20