National Australia Bank has launched a new loan to help farmers buy their first properties in the face of soaring land prices.
Lower equity requirements and terms of up to 30 years are the two big features of the NAB's Future Farmer loan designed to help farmers fund their first farm or manage succession.
NAB Executive Regional and Agribusiness Julie Rynski said the loan had been in the works for about eight months, after the bank decided it would find a way to help people into farm ownership.
"I was reading an article about a Queensland manager who was looking to purchase a property that he'd been working on for a number of years because the farmer wanted to get out and he just didn't have the equity," she said.
"And I thought, wow, it feels like something that we should look at."
Ms Rynski said the normal interest rates would apply to the Future Farmers loans to "make it fair" to the bank's existing customers but, because the terms could be as long as 30 years, principal repayments would be easier to manage.
While Ms Rynski said she couldn't reveal how little equity was required to secure one of the loans, she said applicants would need to be able to demonstrate solid farming experience in order to be successful and off-farm income earned by themselves or family would also be considered.
"It's not always young people, but people who potentially have been doing this type of work for a period of time and then get an opportunity to to own their own piece of land," she said.
"It's just a way for us to say, if they've got the experience and we know that they will be able to make this sustainable and profitable for their own purposes, that we're happy to support them in a very different way, which is less deposit and more return."
The Future Farmers loan would be just as suitable for farmers needing to buy out siblings as part of a family succession process, Ms Rynski said.
The loans would still need to comply with regulatory requirements regarding affordability but represented movement within the bank's own parameters although, Ms Rynski said, NAB recognised that low-equity loans were not ideal for most businesses.
"The reality is that there is some risk associated with it," she said.
"There is, absolutely, and in actual fact, not everybody wants a 30-year farm loan because, if you think about the fabulous seasons people are currently having, most farm loans don't actually go the same length of time that a homeowner has.
"They have the ability to have quite outstanding seasons from time to time and then sadly, some not so good, so they usually try and shorten their timeframe."
Those with a Future Farmers loan would be paired with one of the bank's agriculture specialists to help manage their finances and be offered a subscription to accounting package, Xero, for better oversight of their position.
"I think we are Australia's largest agri bank, we're passionate about it and we know that, for agriculture to be successful, we need to support the next generation," Ms Rynski said.
"The total number of farmers are decreasing year on year and you know, we just want to support whoever we can."