*22—Lancaster Farming, Saturday, January 3,1981
FmHA raises
interest rates
WASHINGTON, DC. -
The U.S. Department of
Agriculture’s Farmers
Home Administration raised
its basic interest rates to 13
percent on December 20,
FmHA Administrator
Gordon Cavanaugh said last
Monday
Because of the higher
costs in borrowing from the
U S Treasury, FmHA raised
interest rates to 13 percent
on
-low to moderate income
rural housing loans,
-farm operating loans
(including economic
emergency loans for
operating purposes) and
-disaster emergency
loans for annual production
or operating purposes above
actual losses
Cavanaugh said the in
crease in housing interest
rates applies only to non
subsidized FmHA housing
loans.
“Home loans will still be
available at rates as low as
one percent for low-income
families under the ‘interest
credit’ provision of the
national housing act,’ he
said.
According to Cavanaugh
the agency’s interest rates
are now set at 12 25 percent
for most long term farm
loans, including farm
ownership, soil and water,
recreation, grazing
association, irrigation and
drainage, economic
emergency loans for real
estate and disaster
emergency loans for major
adjustments above actual
losses.
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loans and biomass fuel
facilities loans will also be
made at 12.25 percent,” he
said.
“For disasters occurring
between July 3 and
December 19, 1980,
emergency loans will be
made at 11.75 percent to
applicants who can get
credit from other sources,”
Cavanaugh said.
Rural renting housing and
rural housing site loans will
be made at 11.5 percent.
Cavanaugh also said that
interest rates on
-loans to limited resource
farm applicants will be
made at seven pecent for
operating purposes and five
percent for real estate
purposes;
-loans to cover actual
losses from disasters oc
curring after Oct. 1, 1978,
will remain at five percent;
-loans on water, waste
disposal and community
facilities will remain un
changed at five percent.
•‘FmHA interest rates had
not changed since Sep
tember 26, but mcreases
were forced up because of
recent rises in the prime
interest rate,” Cavanaugh
said “Interest rates will
continue to be negotiated
between borrower and
lender for the agency’s
guaranteed loan programs ”
The formulas used in
setting FmHA’s interest
rates and other government
lenders are prescribed by
law and closely tied to the
cost of federal borrowing
and prevailing private
market interest rates for
similar maturities
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