Blog > Interest Rate Outlook for 2025 - Q4
Interest rates have been on everyone’s mind in 2025, and for good reason. After a historic run-up in rates aimed at taming inflation, there are now clear signs of a shift in the other direction. Both investors and buyers are watching closely, and for those involved in land and farm real estate, the trend lines matter a lot.
Where Rates Are Headed
Recent economic reports have reshaped expectations for the Federal Reserve’s next moves.
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Federal Reserve Cuts Likely – Weak August jobs data (just 22,000 new jobs added) has markets betting heavily on rate cuts at the September 16–17 Fed meeting. A 25-basis-point cut looks very likely, and some are even suggesting a 50-point reduction could be on the table (Reuters, Investors.com).
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Longer-Term Forecasts – Some Wall Street firms, including Morgan Stanley, are projecting the federal funds rate could fall to around 2.25% in 2025 and stabilize near 2.75% by the end of 2026 (MarketWatch).
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Mortgage Rates Already Sliding – The average 30-year mortgage rate has dipped to around 6.5%, the lowest in nearly a year. Projections from Fannie Mae suggest rates could ease toward the 5.9%–5.7% range by the end of 2025.
What This Means for Land
From my perspective as someone who spends every day in the land and farm real estate market, here are a few ways I see lower rates impacting buyers and sellers:
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Improved Buyer Confidence
Even a modest drop in financing costs can bring more buyers back to the table. For farmland buyers running tight cash flow models, lower interest rates can make the difference between a deal working or not. -
More Competitive Bidding
If financing costs ease, investors may feel comfortable stretching further on price per acre. This could give sellers of high-quality land a better shot at achieving strong offers, especially in competitive counties. -
Stronger Market Liquidity
One of the challenges in today’s land market is limited buyer activity due to financing headwinds. If rates continue trending down, more buyers should re-enter the market, creating healthier demand. -
ROI Still Matters
While lower rates help, buyers remain cautious about farms with higher fixed costs (cash rent, input costs, levee fees, crop insurance premiums, property taxes). The fundamentals still need to work.
A Balanced Perspective
I believe falling rates can provide a tailwind for the land market, but they won’t erase every obstacle. Buyers will still be doing their homework, and sellers should remain realistic. That said, the outlook is far more favorable today than it was even six months ago, and that’s a positive step forward.
Disclaimer
This blog is for informational purposes only and reflects my personal opinions as of the date of writing. It should not be considered financial, investment, or legal advice. Real estate markets are influenced by many factors beyond interest rates, and individual circumstances will vary. Readers should conduct their own due diligence and consult with qualified financial or legal professionals before making any investment or selling decisions.
Dennis Prussman, Realtor & Auctioneer
https://premierlandsales.com/dennisprussman
Land Specialist, Realtor, Auctioneer, Husband (38-years), Dad, Bee Keeper, Veteran (34-years).
Dennis is a Sellers Agent who specializes in marketing Missouri farms to a local, regional, and nationwide audience with a goal of maximizing the farm’s sale price. He offers both traditional listing and auction services and is an award-winning marketing specialist at the national level. He has a reputation for exceeding sale price and customer service expectations.
