UK businesses borrowed record sums in March, while consumers cleared £3.8bn of debt, according to figures from the Bank of England that show firms and individuals “battened down the hatches” as the coronavirus crisis hit.

The Bank said £34.1bn of loans had been advanced to firms during the month, the highest figure since records began in 1998.

The figures include new lending made under the government’s coronavirus business interruption loan scheme and the Bank’s term funding scheme, put in place to support businesses during the crisis.

The annual rate of growth in borrowing by UK businesses rose to 8.2%, and within this borrowing by large businesses rose sharply, to 11.8%.

Deposits held by businesses rose by £34bn over the same period, and the Bank said changes in deposits and loans correlated closely across industries.

Meanwhile, new borrowing on credit cards and loans plummeted. New lending fell by £5.4bn over the month, resulting in the highest level of repayments recorded by the Bank since it started tracking the figures in 1987.

Credit card spending was down by 0.3% year-on-year – the first time the Bank has recorded an annual drop.

The fall is likely to be a reflection of the huge fall in consumer spending since physical distancing measures were introduced and households began to avoid shopping and leisure activities, rather than a sign that households are actively clearing debt. Deposits held in bank accounts leapt by £13.1bn, despite falling interest rates.

The Bank also noted a £1.3bn fall in repayments during the month, which could be a result of payment holidays being offered by banks and credit card providers to those who incomes have reduced by the crisis.

Samuel Tombs, the chief UK economist at Pantheon Economics, said the figures showed “that private-sector demand for cash surged in March, as businesses and households battened down the hatches.

“Data for April will provide a clear steer on whether businesses are collapsing, though March’s figures are tentatively encouraging.”

The Bank also reported a drop in the number of mortgages approved by lenders, with loans for both purchases and remortgages falling in March.

The number of house purchase loans fell by 24% to 56,200 – the lowest level for seven years, while the number of remortgages was its lowest since August 2016, at 42,600.

In February, house purchase loans had hit a seven-year high and the market appeared to be geared for a year of rising activity and prices.

But it was, in effect, suspended in late March after ministers told would-be movers to delay their moves where possible. An estimated 373,000 sales are on hold.

The UK’s biggest building society, Nationwide, said on Friday the housing market was “grinding to a halt” and warned it might not be able to produce its regular house price index over the coming months if there were too few transactions.

The lender reported a 0.7% increase in UK house prices in April, but said that 80% of the deals in its sample related to mortgage applications that started before the lockdown, and before the full extent of the impact of the pandemic became clear.

Robert Gardner, Nationwide’s chief economist, said the medium-term outlook for the housing market was “highly uncertain”, with much depending on the performance of the wider economy.

“Economic activity is set to contract significantly in the near term as a direct result of the necessary measures adopted to suppress the spread of the virus,” he said.

“But the raft of policies adopted to support the economy, including to protect businesses and jobs, to support peoples’ incomes and keep borrowing costs down, should set the stage for a rebound once the shock passes, and help limit long-term damage to the economy.”

Hansen Lu, a property economist at Capital Economics, said the rise in house prices would not last, and predicted a 4% drop over the year.

“House prices are sticky – buyers may be seeking discounts in light of uncertainty and the economic hit from the pandemic, but owners won’t accept unless forced to by worsening economic circumstances,” he said.

“This suggests that while house prices may appear resilient in the short term, as the economic hit from the pandemic continues, some owners will be forced to accept price cuts eventually.”