Higher for Longer: What the Current Interest Rate Environment Means for Asset Valuations

At the start of 2026, many businesses were planning for a year of gradually falling interest rates. Six months on, the picture looks very different.

Persistent inflation, higher energy prices and continued global uncertainty have all contributed to the Bank of England keeping rates higher than many expected. Rather than asking how quickly borrowing costs will fall, businesses are now planning for a financing environment that may remain restrictive for longer.

For organisations financing, leasing or managing capital assets, that shift has wider implications than the cost of borrowing alone. It is influencing investment decisions, changing demand across secondary markets and challenging valuation assumptions that may only have been made a few months ago.

A different economic backdrop

The Bank of England has held Bank Rate at 3.75% for four consecutive meetings, with inflation remaining above its 2% target. While markets had anticipated further rate cuts during 2026, expectations have softened considerably as policymakers continue to balance inflationary pressures against slower economic growth.

Forecasts also remain mixed. Some economists expect rates to remain broadly unchanged for the rest of the year, while others believe another increase cannot yet be ruled out. The result is continued uncertainty for businesses making long term investment decisions.

Investment hasn’t stopped, it’s become more selective

Despite a more challenging financing environment, businesses haven’t stopped investing.

Recent asset finance figures show continued growth in funding for plant, machinery and sustainable technologies, suggesting organisations are still prepared to invest where productivity gains justify the cost.

What has changed is the level of scrutiny around those decisions. Businesses are taking a more considered approach to capital expenditure, placing greater emphasis on utilisation, return on investment and the value of assets already on their balance sheet.

As financing costs remain elevated, well specified used equipment can also become a more attractive alternative to buying new, helping to support values across parts of the secondary market.

“Financing costs are staying higher for longer than many expected, but investment hasn’t disappeared. Businesses are simply becoming more selective. That’s why accurate, current market valuations are becoming even more important. Decisions based on assumptions from six months ago may no longer reflect today’s market.”

James Fox, Senior Director, Hickman Shearer

Why this matters for valuations

Changing economic conditions don’t affect every asset in the same way, but they do change the assumptions that sit behind many valuation decisions.

In the current market, organisations should consider whether:

• Residual value assumptions still reflect today’s financing environment.
• Existing portfolios have been reviewed against current market evidence rather than historic expectations.
• Surplus assets could release capital at a time when financing remains comparatively expensive.
• Longer equipment lifecycles are changing supply and demand within secondary markets.

Independent valuations provide a snapshot of where the market is today, helping businesses make decisions based on evidence rather than expectation.

Looking ahead

The Bank of England’s next interest rate decision will provide further direction, but uncertainty is likely to remain a feature of the market for some time.

For lenders, investors and asset intensive businesses, that makes current market intelligence increasingly valuable. Whether you’re reviewing a lending portfolio, planning capital investment or considering the disposal of surplus equipment, understanding how market conditions are influencing asset values can lead to better informed commercial decisions.

If you’d like to discuss how the current economic environment could affect your asset portfolio, our team is here to help.

About Hickman Shearer

Hickman Shearer provides independent, RICS-regulated capital asset valuation, management and sales services across a broad range of industries. We help lenders, investors, owners and operators understand the value of their assets, make informed commercial decisions and maximise returns through independent advice backed by market evidence.

Contact us: expert@hickman-shearer.co.uk | +44 (0)20 3668 0580

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