Quarterly interest rates fall to 2022 levels
Interest rates in the fourth quarter of 2025 dipped to rates not seen since 2022 – lower than the peaks of 2023 but remained above the 10-year average – a signal lending conditions were more favorable for farmers despite overall credit conditions deteriorating as the year came to a close. The conditions were reported in lender surveys from major agricultural regions including Chicago, Dallas, Kansas City and Minneapolis Federal Reserve districts.
Despite interest rates notably falling in the fourth quarter and the demand for loans increasing, the rate of loan repayment dropped across all reporting districts. Survey respondents said the sentiment surrounding credit conditions was dependent on their source of revenue.
A Montana lender said, “Livestock producers in our area have been very profitable,” referencing the historically high beef prices.
While a lender in Dallas shared, “Commodity prices continue to slump, making profitability more difficult … Many producers are looking to livestock or hunting to help with crop production revenue shortfalls.”
The bright spot to the agricultural credit scene was lending rates, as one South Dakota banker put it: “Lower interest expense should help offset some of the other costs.”
Interest rates for the fourth quarter of 2025 ranged from 6.63% to 8.12% across reporting districts, with the average variable rate at 7.27% and the average fixed rate at 7.45%.
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 fell from the third quarter into the fourth quarter. The largest decline was recorded in operating loans with a 0.36% difference.
- Dallas: The average interest rates on both fixed- and variable-rate loans in all categories dropped in the fourth quarter, ranging from a 0.18% difference on fixed-rate operating loans to a 0.38% difference in the variable-rate real estate loan category.
- Kansas City: Interest rates on fixed- and variable-rate loans in all categories were lower in the last quarter of 2025. The small interest rate was in variable-rate real estate loans at 6.91%.
- Minneapolis: Rates dropped in all categories during the fourth quarter compared to the quarter prior. Real estate loans, both fixed rate and variable rate, fell 0.2% as fixed-rate operating loans and fixed-rate machinery loans fell 0.3%, and variable-rate operating and machinery loans fell 0.4%.
Rates remain unchanged at March FOMC meeting
At the March meeting of the Federal Reserve Board’s Federal Open Market Committee (FOMC) and noted in the meeting’s minutes, the board voted to maintain interest rates at 3.5%-3.75%. The decision was made with the committee’s goal of achieving maximum employment and an inflation rate of 2% over the long run, however recognizing that uncertainties about the economic outlook of the U.S. remains elevated particularly with implications from developments in the Middle East.
Remaining 2026 FOMC meeting dates include: April 28-29, June 16-17, July 28-29, Sept. 15-16, Oct. 27-28 and Dec. 8-9.
