By Matt Falloon and Christina Fincher

LONDON (Reuters) - Mortgage approvals picked up from near record lows in January, the British Bankers' Association says, indicating an expected slowdown in the housing market may be less severe than some fear.

Many economists expect house prices to fall this year as growth cools in the wake of a global lending crunch, but there is some uncertainty over how much the economy will slow and how far interest rates will need to fall as a result.

Bank of England policymaker Kate Barker said in an interview with a regional newspaper published on Monday that a recession remains unlikely.

The BBA said mortgage approvals rose in January to 44,288 from 42,343 in the previous month, but were still down by nearly a third on a year ago.

Underlying net mortgage lending also picked up, rising 5.2 billion pounds last month after an upwardly revised 4.9 billion increase in December. January's figure was in line with the previous six month average.

"With credit conditions likely to continue tightening, and the growing expectation that house prices will fall this year, we would still expect to see some further declines in house purchase activity looking forward," said Allan Monks, economist at JP Morgan.

"But the rise in the BBA provides some tentative signs that we may be close to the bottom of the current slowing in house purchase activity."

Much of the rise in lending in January came from remortgaging as borrowers honed in on better deals.