British mortgage approvals edged up more than expected to their highest in nearly two years last month, but the overall picture for lending remained well below pre-crisis levels and the outlook appears set to darken.
The figures come just hours before Chancellor George Osborne unveils updated government growth and borrowing figures, expected to foreshadow a sharp slowdown in the economy and a bigger government debt burden.
The Bank of England said approvals for home loans -- a gauge of house prices in six months' time -- numbered 52,743 in October, up from 51,193 in September.
This was the highest since December 2009, and above economists' forecasts of a reading of 51,500, but well below the long run average before the financial crisis of around 90,000.
Mortgage lending rose by the biggest amount since January 2011 at 1.288 billion pounds, but net unsecured consumer credit was weak on the month, edging up just 49 million pounds, the smallest increase since the start of the year.
Bank figures showed the biggest annual fall in M4 broad money supply since monthly records began in 1983.
The Bank's preferred measure, M4 excluding intermediate other financial companies, showed a small annual rise of 2.8 percent.
Britain's economy is on the brink of recession after barely growing over the past year. High unemployment, above-target inflation and weak wage growth have depressed consumer morale and stoked fears about the outlook.
The OECD slashed Britain's GDP forecasts for 2012 on Monday and warned that the country is likely to return to recession early in 2012.
The government's independent fiscal watchdog, the Office for Budget Responsibility, is expected to cut its growth forecasts later today.
Britain's consumers have been reluctant to take on more credit for major purchases as bank lending conditions are relatively tight and uncertainty over jobs is weighing on sentiment. BoE figures showed that net credit card borrowing was subdued at just 93 million pounds in October.