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The £12.2bn acquisition of HBoS was confirmed last week and subject to approval, the deal is expected to be completed by early 2009.

It is thought the combined brands will have a market share of about 30 per cent.

The combining of the two lending giants would have been contested by the Competition Commission on the grounds it would create a significant monopoly.

However the deal was approved by the prime minister Gordon Brown, who said the deal would not be contested on the grounds of public interest.

Matthew Wyles, group executive director for Nationwide, said he believed the takeover would lead to an increase in the price of mortgage products.

He said: "For the security of the UK banking system this was a necessary move and the regulators have handled it extremely well. However in the long-term in the perspective of the choice and the price of financial service products, that is a negative part of this positive news."

Vicki O'Connell, public and media relations manager of Chelsea Building Society, said: "What it does mean as such a large player it will have a large influence on pricing. The companies are going to have to make quite a profit to justify this so we will watch the pricing with interest."

Jason Clarke, head of PR for Skipton Building Society, said if the combined lenders were able to secure cheaper funding then it could create an issue in terms of pricing and competition.

He said: "Obviously the big concern is the 30 per cent figure of market share. That said historically Halifax has always knocked around the 20 per cent to 25 per cent figure and we have all managed to deal with that.

"There is plenty of competition out there and plenty of competition in different sectors so I do not think too many lenders will be too worried about it."

Steven Marks, lending and operations executive for Newcastle Building Society, said the combined brands would have "sheer power and influence" in the market but he hoped in pricing terms it would remain a level playing field.

He said: "It could either really drive prices up, price the margin up, which would arguably be unfair on a lot of existing borrowers, or it could go completely the other way. With the sheer financial might they have they could drive the price down to grow their market share more."

However Iain Cornish, chief executive of Yorkshire Building Society, said he did not believe the nature of competition in the mortgage market would change as a result of the takeover.

He said: "I suspect the large players in the banking industry such as HSBC, Barclays or perhaps Nationwide may find the new player more irritating, but when the market settles down there will be just one less big player."