* Q3 EPS C$0.81 vs est C$0.77

* Mortage funding at C$454.5 mln

* Says credit mkts improving

* Declares C$0.10 dividend

Nov 5 (Reuters) - Canadian mortgage lender Equitable Group Inc (ETC.TO: Quote, Profile, Research) posted better-than-expected third-quarter profit as net interest margins rose due to better pricing of its new and renewing mortgages.

The company posted a quarterly net income of C$12 million ($11.3 million), or 81 Canadian cents, up from C$10.8 million, or 74 Canadian cents, a year ago.

Analysts on average had expected earnings of 77 Canadian cents a share, according to Thomson Reuters I/B/E/S.

Net interest margin on a taxable equivalent basis increased to 2.2 percent from 1.7 percent a year ago.

"The economic and credit market landscapes have improved continuously over the second and third quarters of 2009," Chief Executive Andrew Moor said in a statement.