(Adds details on results, background) Feb 7 (Reuters) -...

(Adds details on results, background)

Feb 7 (Reuters) - Australia and New Zealand Banking Group (ANZ) on Monday joined rival Westpac (WBC) in flagging lower margins, even as its efforts to capitalize on a boom in the Australian housing market helped its loans balance sheet grow.

Australian lenders are battling squeezing margins in the face of steep competition in mortgage lending, spurred by record low interest rates in Australia through the COVID-19 pandemic.

The country's number three lender, which did not disclose a profit figure for the quarter, said group net interest margin declined by 8 basis points, but said rising interest rates in New Zealand would provide it some support in the second quarter.

Westpac last week beat estimates for first-quarter profit but warned that steep competition in mortgages would further drag margins this year.

ANZ said its common equity tier 1 (CET1) ratio, a closely watched measure of its spare cash, was 11.6% at Dec. 31, compared with 12.3% as at Sept. 30.

It added that the bank was considering increasing the size of its current A$1.5 billion ($1.06 billion) buyback programme as it had enough flexibility to return further surplus capital to shareholders.

($1 = 1.4130 Australian dollars)