and elsewhere, such as consumer lending. 4 i will focus on property markets. buy - to - let first and foremost, within the residential property market, lending for buy - to - let has been growing strongly for a number of years. the stock of buy - to - let mortgage lending has grown at an annual average rate of 6 % since 2008. it rose by 11. 5 % in the year to 2015 q4, while the stock of lending to owner occupiers was unchanged. buy - to - let mortgages now account for 17 %, by value, of the total stock of secured lending. lending for buy - to - let has clearly been profitable. at around the start of 2016, lenders were planning to grow their gross buy - to - let lending by, on average, almost 20 % per annum over the next two years, with some challenger banks and smaller building societies planning to grow their buy - to - let books at a much faster rate. a good rule of thumb for financial stability is that when some form of credit is growing fast one needs to look very carefully at whether lenders ’ underwriting standards are slipping and at what is happening to the distribution of borrowers ’ indebtedness. the prudential regulation authority ( pra ) conducted a review of lending for buy - to - let mortgages and concluded that there was indeed some evidence of loosening underwriting standards and a possibility that this might increase. as a result, the pra board has issued a supervisory statement to clarify expectations for underwriting standards in the market. the statement includes guidelines for testing the affordability of interest payments and a minimum stressed interest rate for use in lenders ’ affordability tests. there are also substantial tax changes affecting the buy to let market. the fpc ’ s expectation is that the government ’ s changes in stamp duty and mortgage interest tax relief for buy - to - let, together with the pra ’ s actions, will probably dampen the growth of buy - to - let lending. mortgaged buy - to - let accounts for only around 10 % of all housing transactions for house purchase so the impact on the housing market as a whole may not be great. but market dynamics are difficult to predict and given the uncertainty around the impact of the tax and supervisory changes, the fpc decided to wait and see how the market reacted before considering whether to take action on buy - to - let. the committee continues to watch the buy - to -

effect like this after 9 / 11 for example. but it might also reflect a revision by households and firms about the sustainable path of income and wealth in the coming years. the change in expectations may reflect the higher costs of borrowing and a higher risk of unemployment. again a reduction in confidence about future growth may lead directly to lower consumption and investment. it is also likely to affect equity and property markets. potential buyers may decide to wait before purchasing if they sense that there is a chance that prices may fall. such behaviour can be self - fulfilling. there is no doubt that the housing market has been weakening significantly in recent months and the trend is more advanced still in commercial property markets where prices are falling rapidly. it is widely assumed that weakening property prices will also depress consumption. the bank has tended to be sceptical of this mechanism. 9 while property prices and spending tend to move together, that doesn ’ t prove that one causes the other. both may result from changes in income and expectations of future income. 10 indeed, in the same way as you can ’ t have your cake and eat it, it is not clear that a general increase in house prices does create extra spending power for the population as a whole. owners who expect to remain in their current house for a long time cannot also spend their housing wealth and the benefits to those trading down are broadly offset by the costs to those trading up. while older owners may be richer and believe they can support a more expensive lifestyle, the rise in prices will show through in higher rents and larger deposits for those wanting to get on the ladder. the deloitte cfo survey : benchmarking corporate financial attitudes, 4 january 2008. benford, j and nier, e ( 2007 ), “ monitoring cyclicality of basel ii capital requirements ”, financial stability paper no. 3 ( december 2007 ), bank of england. this view is discussed fully in benito, a, thompson, j, waldron, m, and wood, r ( 2006 ), “ house prices and consumer spending ”, bank of england quarterly bulletin, summer, pp. 142 - 154. some household level evidence for this view is given by attanasio, o, blow, l, hamilton, r, and leicester, a ( 2005 ), “ consumption, house prices and expectation ”, bank of england working paper no. 271. but even if there is not a strong causal connection between house prices and consumption through a wealth channel, there may nevertheless