Farmers paying down debt as bank satisfaction climbs

Thursday, 16 July 2026

The Feds’ latest survey and Reserve Bank data shows that farmers are taking advantage of strong returns to pay debt.

Farmer satisfaction with banks is up and lending seems to be down across the majority of the agricultural sector.

The latest Federated Farmers Banking Survey and Reserve Bank data highlights that farmers are capitalising on strong returns for meat and milk.

Reserve Bank data shows that total agricultural lending dropped $1.4 billion to $61.2 billion in the year to April 2026. Feds’ banking spokesperson Mark Hooper was pleased to see the flow on effects of a good season.

The Feds’ banking spokesperson, Mark Hooper, says farmer satisfaction with banks is up.

“Strong dairy payouts, including a capital redistribution of $2 per share to Fonterra suppliers, combined with record beef and sheep farmgate prices, have likely allowed farmers to meaningfully reduce loan principal.”

In April, Waikato cockies said they would use the Fonterra capital injection to pay down debt or re-invest in farm infrastructure rather than rush out to buy a new ute.

The buoyant rural sector was trickling into the wider Waikato economy with the core retail spending in Waikato rising 1.4% in June compared with the same month last year, largely attributed to healthy Fieldays spending.

The Feds’ survey of 540 farmers highlighted that the number of respondents with mortgages under $2 million has risen to 41%, up from 38% six months earlier.

The average mortgage rate was 5.49%, down from 5.78% in the November survey, and two out of five respondents to the May survey have over 75% of their loans on floating rates.

The arable sector was not in as strong a position as sheep and beef and dairy.

“The outlier is arable farms,” Hooper said. “That sector is in near-crisis mode, with weak grain prices, rising costs, tough growing conditions and competition from lower costs imports. The arable farm median mortgage of $3.5 million is the highest of all farm types.”

According to the survey, farmers’ relationships with their banks were improving. Farmer satisfaction with them was at 69% compared to 61% in November last year, and only 10% said they felt under pressure from banks - the lowest number since 2018.

“One finding that all banks should ponder: the single most consistent theme across more than 200 general comments added by farmers was that a knowledgeable, available bank manager outweighs factors such as loan rate competitiveness,” Hooper said.