The Bank of England apologised last night after a crucial payments system collapsed, forcing Mark Carney to launch an urgent investigation following the delay of hundreds of thousands of payments, including for homebuyers waiting for money to be transferred to pay for their new homes.

The Bank of England governor promised a “thorough, independent review” after MPs demanded answers into how the system which processes payments worth an average £277bn a day had failed for nearly 10 hours.

An 88-year-old woman in Sheffield was among those caught up in the collapse of the behind-the-scenes payment mechanism, which failed to open at 6am and remained shut until 3.30pm – usually the cut-off point for money to be transferred for house sales.

The Bank of England did not admit the shutdown had taken place for more than five hours after the system had been due to open, and was later forced to extend opening hours by four hours to 8pm to clear the backlog of 143,000 payments.

More than 10 hours after first admitting to the problem with the clearing house automated payment system (Chaps) the Bank of England eventually apologised “for any problems caused by the delays to the settlement system”.

While Chaps was down, there were fears that homebuyers and sellers around the country would be left unable to complete purchases on time and that big businesses, which also use the system, would fail to make payments. Only weeks ago the Bank said it had a new contingency plan for the collapse of the payments system. The Bank of England will subject the system to additional monitoring when it reopens at 6am on Tuesday.

The systems for processing direct debits and internet transactions are not affected by the problem, which is thought to have been due to an attempt to add a new bank to Chaps over the weekend.

Estate agents were among the first to raise concerns, with the National Association of Estate Agents warning of the “cascading” effect of the delay on payments scheduled for later in the week, and a knock-on effect on van hire and transferring gas and electricity services.

Kaye Orwin of Andersons estate agents in Sheffield had been dealing with two families aiming to complete their moves. She said her day had started with a call from solicitors to say that “money had been put in the system from the purchase at the bottom of the chain but then it couldn’t come out”.

By 4pm, when the money had still not been transferred, the solicitors arranged a legal undertaking agreeing that payments would be made as soon as the system recovered. This allowed the buyers to get their keys.

The sellers who were next up the chain, the 88-year-old woman and her son, were already packed when things went wrong. “The removal van was sat on the driveway,” said Orwin. “We’ve opened the garage and they are putting things in there for now. The buyers at the bottom of the chain have to be out of their rental home today.” She said that in more than 20 years of selling homes she had never experienced this kind of problem.

“It is stressful enough moving house anyway without this kind of thing happening.”

Other sellers and buyers took matters into their own hands. In Great Missenden, Buckinghamshire, Amanda Hart let her buyers borrow the keys even though the money had not arrived. Banks also took steps to alleviate any problems. Barclays said it usually processed transactions 24 hours early for homebuyers, while Royal Bank of Scotland said that payments for five customers it knew were facing difficulty were processed through a different system. Nationwide building society said it had staff working late.

It was not immediately clear how many homebuyers people were affected by the glitch but last October nearly 2,500 house purchases a day were completed on a Monday, according to analysis of Land Registry data by Neal Hudson at property firm Savills, making Monday the third most popular day of the week to move house. Transaction levels are up markedly on 2013, suggesting more deals will have been caught in the chaos.

Chaps is a key part of the financial system, processing 92% of transactions between banks in terms of value, and is used in large-value transactions. The average payment is £2.1m. It is rare for it to be out of action for almost a whole day. It was shut for six hours in 2007 and briefly last year.

Andrew Tyrie, who chairs the Treasury select committee of MPs, wrote to Carney to demand answers.

“A crucial part of the UK’s financial infrastructure failed for several hours today,” he said. “I will be writing to the Bank of England to find out why. The whole economy depends on a reliable payment system. We need to have confidence that the cause has been found and addressed.”

The Bank said its independent review would “cover the causes of the incident, the effectiveness of the Bank’s response and the lessons learned for future contingency plans” and pledged to publish the findings.

The Law Society was also concerned. Its vice-president, Jonathan Smithers, said: “We are talking to the relevant bodies to see if we can obtain some understanding of why the system has failed and assurances that this will not occur again.”

The Bank of England gave few clues other than to say at 11.15am that it had been hit by a technical issue “related to some routine maintenance of the RTGS (real-time gross settlement system)”. By 4.05pm it said the system was working and would extend hours to “maximise the opportunity for settlement”. It has a backup system but did not use it.

Chaps said all payments submitted had been processed.

Phil Kenworthy, managing director of Chaps, urged customers to contact their banks with queries and said he “would like to apologise for any delays any customers may have experienced with their payments”.

How Chaps works

The clearing house automated payment system known in City circles as Chaps describes itself as the “unsung hero” of the banking world, as it processes about 140,000 transactions a day, worth on average £277bn.

It means the system, part of the behind the scenes plumbing of the financial world, that moves larger size payments around the financial system, turns over the equivalent of Britain’s annual GDP every five working days.

Money is moved instantly between banks handling transactions for big companies, foreign exchange deals for big players in the financial markets and short-term loans between banks, companies paying their staff and. But most people will only come across the system when they need to move the significant sum required to buy a house.

While homebuyers were concerned when the system stopped working for almost 10 hours on Monday, the money it processes for them is just a fraction of the transactions it handles daily. The Bank of England manually processed transactions that were crucial to the smooth running of the financial system.

It is one of a number of processing systems used by the Bank to shift money seamlessly. The Link system used to process cash machine payouts; Bacs, the system to process direct debits; and the fast payment system used to process internet transactions were not affected. Neither was Crest, the system used to handle share trading.