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Bankers Expect Higher Funding Costs as Outlook for Loan Demand Softens

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Bankers Expect Higher Funding Costs as Outlook for Loan Demand Softens

Bank executives expect a tougher operating environment over the next year, with continued pressure on funding and little improvement in loan demand, according to a survey by fintech IntraFi.

Eighty-seven percent of respondents expect funding costs to increase in the next 12 months, up 84 points from the third quarter of 2025.

“Bankers are facing pressure on both sides of the balance sheet,” said Mark Jacobsen, CEO and cofounder of IntraFi. “The challenge is how to pursue growth without sacrificing profitability or stretching balance sheets. That puts a premium on disciplined pricing, strong customer relationships, and flexibility in how banks fund their business.”

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IntraFi’s third quarter Bank Executive Business Outlook Survey was conducted online from October 5 to October 19, 2026, and includes responses from 411 bank CEOs, presidents, CFOs, and COOs nationwide.

Bond market volatility is also shaping bankers’ outlook. Over the next 12 months, 58% said the most significant potential effect of current long-term interest rates and bond market volatility on their securities portfolios would be higher funding costs or pressure on net interest margins. Another 16% cited further unrealized losses that could limit capital flexibility.

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