The Bank of England said yesterday that British consumers repaid the highest amount of unsecured credit on record in October, reducing their debt at twice the rate economists had expected while separate figures showed a key measure of money supply fell during the month.

Net consumer credit fell for the fourth straight month in October, dropping by £579m after a £299m drop the month before. That was the biggest fall since records began in April 1993 and compared with analysts’ forecasts of a £200m drop.

But the number of mortgages approved for house purchases rose for the 11th month in a row in October.

Broad money supply, known as M4, rose by 1.6% in October, the biggest monthly increase since January.

But the Bank of England’s preferred measure – M4 excluding intermediate financial corporations – dropped by 0.7% on the month, following a 0.8% fall in September, and by 5.3% on three-monthly annualised rate.

That will cast further doubt on the effectiveness of the central bank’s £200bn quantitative easing policy, which many had expected to raise money holdings outside the financial sector and thereby stimulate economic growth.

The Bank’s data showed that household sector holdings of M4 rose 0.1% on the month and 2.9% on the year, while corporate holdings gained 0.5% on the month and 3.0% on the year.

But M4 lending to the household sector grew at its weakest pace since the bank started to collect the data in 1997, lifting 0.1% on the month and 1.8% on the year.

To the corporate sector, M4 lending was flat on the month and dropped 3.2% in annual terms.

The disappointing data could prompt rate-setters on the Bank’s Monetary Policy Committee to further expand quantitative easing – effectively printing money – after agreeing £25bn extra earlier this month.

Vicky Redwood of Capital Economics warned: “A strong economic recovery does not look likely when this measure of money is still falling, let alone rising at the 6% to 9% annual rates the MPC is looking for.”

Howard Archer, a senior economist at IHT Global Insight, added: “Overall the data will do little to ease the concerns of the Bank of England’s Monetary Policy Committee that muted bank lending to businesses remains a significant threat to the strength and sustainability of any recovery. As such, the data are likely to maintain belief within the MPC that all policy options need to be kept open despite the economy’s probable return to growth in the fourth quarter.”

The Bank embarked on its quantitative easing scheme nearly nine months ago although the UK has lagged other major economies in pulling out of recession.

The Bank said unsecured loans fell by £713m in October compared with September. Borrowing on credit cards rose by £134m in October compared with September, but was more than offset by the record fall of £713m in other forms of consumer credit such as bank loans, loans for cars, and hire purchase agreements.

Net mortgage lending, which strips out redemptions and repayments, totalled £922m in October, up slightly on both the previous month and the six-month average.