When it comes to next year and what lenders could expect from the farm economy, one economist says most agree the industry will continue to see an increase in interest rates.
“That was actually the number one concern for most lenders who responded to us, was that interest rate volatility, and what that does for loan demand, and what that does for potential credit quality issues. Things like delinquencies and charge-offs, and will higher interest rates lead to a repayment capacity problem? That’s top of lenders’ minds - ‘hey, there’s a lot more volatility in interest rates than there used to be, and it’s in a direction that’s different than what we’re used to.’ It used to be, ‘oh, it was always coming down.’ Now the volatility is going higher,” said Jackson Takach.
Takach says that has led to concerns about what interest rates could do to loan demand and how that affects someone’s ability to repay. He says overall, producers are in a good position and the current farm economy can handle higher interest rates for now.
