Speaking at the Banking 2022 Conference on Friday morning, Dr Lowe said "it would be prudent to plan for an increase".
"The last time the RBA increased the cash rate was in November 2010. That's more than 11 years ago," he said.
"There are a lot of borrowers and I'd say frontline members as well who haven't had any experience at all of a rising interest rate cycle.
"For many borrowers that's going to come as quite an unwelcome development."
However Mr Lowe said it is worth remembering many depositors have a different view and will be "part of the community that will welcome higher interest rates."
When questioned about the prospect of an official rate rise, Dr Lowe said he felt no pressure from outside the RBA to increase the official cash rate, despite the cacophony of forecasts from major banks.
"I don't feel mounting pressure, each day we [RBA board members} sit down and think whats the right thing to do," Dr Lowe said.
"When we have those discussions we put aside the external noise."
The comments from the RBA Governor follow on from Wednesday's keynote address in which Dr Lowe addressed the cash rate, saying it was 'plausible' there would be a rate hike later this year.
It also comes a day after RBA deputy governor Guy Debelle announced his resignation after more than 25 years at the central bank.
This is despite being widely tipped to take over the top job after Dr Lowe's term expires in 2023.
Dr Lowe said that with the Term Funding Facility (TFF) coming to an end, the RBA's main focus is now on the level of the cash rate.
The RBA has previously maintained that the cash rate will not rise until inflation and wage growth are 'sustainably' within the 2 to 3% target range, but has since moved away on this not happening until 2024.
"The recent lift in inflation has brought us closer to the point where inflation is sustainably in the target range," Dr Lowe said.
"So too have recent global developments. But we are not yet at that point.
"In underlying terms, inflation has just reached the midpoint of the target band for the first time in over seven years."
While the RBA is yet to raise the official cash rate, lenders have been ramping up home loan interest rate increases in recent months.
Just this week a number of mutual banks increased home loan rates by up to 80 basis points.
Buying a home or looking to refinance? The table below features home loans with some of the lowest interest rates on the market for owner occupiers.
| Lender | Home Loan | Interest Rate | Comparison Rate* | Monthly Repayment | Repayment type | Rate Type | Offset | Redraw | Ongoing Fees | Upfront Fees | Max LVR | Lump Sum Repayment | Additional Repayments | Split Loan Option | Tags | Features | Link | Compare | Promoted Product | Disclosure |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
6.04% p.a. | 6.08% p.a. | $3,011 | Principal & Interest | Variable | $0 | $530 | 90% | 4.6 Star Customer Ratings |
| Promoted | Disclosure | |||||||||
5.99% p.a. | 5.90% p.a. | $2,995 | Principal & Interest | Variable | $0 | $0 | 80% | Apply in minutes |
| Promoted | Disclosure | |||||||||
6.09% p.a. | 6.11% p.a. | $3,027 | Principal & Interest | Variable | $0 | $250 | 60% |
| Promoted | Disclosure |
Image by Guy Basabose via Unsplash
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Harry O'Sullivan
Denise Raward
Dominic Beattie
Staff Writers
