The dam is breaking, though slowly, on interest rate rises as lenders seek to recover some of their profits eroded thanks to ballooning spread between cash and bank bill rates.Macquarie Bank's Puma funding arm advised mortgage managers on Wednesday of increases in interest rates. The new rates vary by loan type and are higher for new business than on existing loans.For prime loans Macquarie's rate rises at this stage are 10 basis points on the base rate - but none on the back book - marketed through mortgage managers.Puma will increase rates on the back book of low doc loans by 20 basis points and on new low doc loans by 30 basis points. The higher rates - which affect the delivery rate to Puma's mortgage managers - apply from October 2.Aussie Home Loans, which would be Puma's primary customer, said through Tim Allerton at City Public Relations that it wouldn't be increasing interest rates for the time being.Puma will no longer fund loans with loan to valuation ratio of 95 per cent or more and will no longer pay mortgage insurance for borrowers.Given that cash to bills spread is now in excess of 55 basis points Macquarie Puma continues to absorb some of the rise in the cost of funds.So far only a few lenders have increased interest to take into account the much higher interest rates, including Adelaide Bank and First Mac, and only on a minority of loans.