The move took the mutual’s share of the gross residential market to 14.1% at the end of September from 10.5% a year ago, as it also closed its £2.9bn purchase of the high street bank in the autumn.

It said its mortgage balances lifted to £210.8bn, from £204.5bn on 4 April of this year.

It added that owner-occupied mortgage balances rose to £166.2bn from £161bn, while buy-to-let and legacy balances edged up to £44.7bn, from £43.5bn over the same period.

The building society added it will realise a bigger-than-forecast gain of £2.3bn from the Virgin Money acquisition.

It had forecast a £1.5bn gain from the deal earlier this year.

Nationwide Building Society chief executive Debbie Crosbie said: “Following our acquisition of Virgin Money on 1 October, we’ve recorded a gain of £2.3bn, as the value of net assets acquired is well above the price we paid.

“This gain provides significant headroom to cover our investment in integration, as well as in service and value.”

However, pre-tax profits at the mutual fell 43% to £568m from a year ago given anticipated movements in Bank rate and continued reduction in overall mortgage margins”.

It warned: “The higher rates customers are now paying on their mortgages may exacerbate existing pressure on their finances, impacting both the housing market and mortgage trading volumes.”

But it pointed out that its residential mortgage arrears, at 0.42% of all home loans from 0.41% in April, “have remained broadly stable and remain well below the industry average”.

Virgin Money, in its final report before merging with Nationwide, reported that its mortgage balances reduced by 4% £55.1bn at the end of September from a year ago “as the group safeguarded overall returns in a subdued market”.