Home Indiana Agriculture News Report: Large Loans Drive Further Increases in Farm Lending

Report: Large Loans Drive Further Increases in Farm Lending

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Growth in the average size of farm operating loans boosted agricultural lending in the second quarter of 2019. A Kansas City Federal Reserve Bank report shows the volume of loans increased 11 percent compared with 2018. The pace of growth is the fastest in the second quarter since 2011. Operating loans continues as the majority of non-real estate farm lending and increased 16 percent. Meanwhile, the volume of non-real estate farm loans exceeding $1 million was notably higher than previous years and contributed significantly to the average size of loans.

According to the survey data, the volume of new non-real estate loan originations at commercial banks totaled more than $800 million in the second quarter. Large loans also contributed significantly to increased agricultural lending activity at commercial banks in the second half of 2018. The report also says the average duration of farm loans has lengthened. Finally, despite increased pressure from weaker farm finances and recent increases in interest rates, farmland values continued to hold relatively steady.