Continuing from the first half of last year’s trend, interest rates in the third quarter of 2025 fell according to lender surveys from Chicago, Dallas, Kansas City and Minneapolis Federal Reserve districts. The modest decline in interest rates was welcomed by borrowers as overall farm finances deteriorated with limited cash flows.
A Montana lender stated, “Livestock producers are doing very well, grain farmers are struggling,” citing the expected abundant crop yield but lackluster prices.
Conditions were similar across all reporting Federal Reserve districts. A survey respondent in Dallas commented, “Area farmers are reporting above-average yields. However, the price of the commodity is less than anticipated. This will cause less loan repayment and greater carryover of farm debt.”
Interest rates for third-quarter 2025 ranged from 6.82% to 8.38% across reporting districts with the average variable rate at 7.6% and the average fixed rate at 7.73%.
Reviewing quarterly lender surveys in predominantly agricultural districts, average interest rates and quarterly included (Table 1):
- Chicago: Interest rates on variable-rate, operating, intermediate and real estate loans all declined in third-quarter 2025 when compared to the previous quarter. The largest decline was recorded in real estate loans with a 0.2% difference.
- Dallas: The average interest rates on both fixed- and variable-rate loans in all categories dropped in the third quarter, ranging from a 0.23% difference in the fixed-rate other farm operating loan category to a 0.03% difference in the variable-rate intermediate loan category.
- Kansas City: Interest rates on fixed and variable loans in all categories were weaker in the third quarter. The smallest interest rate was variable-rate real estate loans at 7.25%.
- Minneapolis: Rates consistently fell across most categories from second- to third-quarter 2025. While most reported a 0.2% decline, fixed-rate and variable-rate machinery loans fell 0.1%, and variable-rate real estate loans fell 0.3% from the previous quarter.
At the time of this writing, lender survey results were available for the second quarter of 2025 from the Minneapolis Federal Reserve district (Table 2). Results fell in line with previously reported data in other agriculture districts. (Read: Weaker ag economy causes interest rates to slip in Q2).
Interest rates from the fourth quarter of 2025 from the Dallas Federal Reserve district were also available at the time of this writing (Table 3), concluding a pessimistic year in that agriculture district.
Rates maintained at January FOMC meeting
During the January meeting of the Federal Reserve Board’s Federal Open Market Committee (FOMC), and noted in the meeting’s minutes released Jan. 28, the board voted to maintain interest rates at 3.5%-3.75%. According to the meeting minutes, indicators suggest that economic activity has been expanding at a solid pace, resulting in the board’s decision to maintain interest rates.
Remaining 2026 FOMC meeting dates include: March 17-18, April 28-29, June 16-17, July 28-29, Sept. 15-16, Oct. 27-28 and Dec. 8-9.
