The Maximum Permissible Interest Rate (MPIR) will increase to 8.51% p.a. from 1 October 2026.
The MPIR is increasing from 8.43% p.a. for the July to September 2026 quarter to 8.51% p.a. for the period 1 October to 31 December 2026.
The MPIR is used when calculating certain residential aged care accommodation payments and contributions. The Australian Government publishes the current and previous rates through the Department of Health, Disability and Ageing.
Who will the new rate affect?
The 8.51% rate will apply to:
- People entering permanent residential aged care from 1 October 2026.
- People moving to a new residential aged care provider.
- Market-price residents who voluntarily move rooms and reset their accommodation agreement.
What does this mean for market-price residents?
For market-price residents, a higher MPIR increases the daily cost of paying for accommodation through a Daily Accommodation Payment (DAP) rather than a lump-sum Refundable Accommodation Deposit (RAD).
Example:
For a room priced at $500,000:
| September 2026 | October 2026 | |
|---|---|---|
| MPIR | 8.43% | 8.51% |
| Approx. DAP | $115.48/day | $116.58/day |
| Annual difference | $401.50 more |
This means that, all else being equal, the higher MPIR increases the cost of leaving the accommodation amount unpaid as a DAP.
What does this mean for RAD-paying residents?
A higher MPIR can make paying some or all of the RAD more attractive because doing so reduces the amount subject to the DAP.
However, the decision should not be based on the MPIR alone. It is important to consider the opportunity cost of using cash or investments to pay the RAD, as well as the potential impact on investment income, Centrelink benefits and other financial arrangements.
The Australian Government provides information on accommodation payments and contributions.
What about low-means residents?
For residents who qualify for government assistance with accommodation costs, the effect can be different.
A higher MPIR can reduce the lump sum required to meet an equivalent accommodation contribution, as the amount is calculated using the applicable rate.
For example, based on the figures in this fact sheet, an MTA of $40 per day would equate to approximately:
- $173,191 at an MPIR of 8.43%
- $171,563 at an MPIR of 8.51%
This means a higher MPIR can reduce the capital amount required to produce the same daily accommodation contribution.
A resident’s means status and accommodation costs depend on their individual circumstances. More information is available from the Australian Government – Means assessment for residential aged care.
What should you consider?
The increase in the MPIR is another factor to consider when deciding how to fund residential aged care.
Before making a decision about paying a RAD, DAP, RAC or DAC, consider:
- Your available cash and investments
- The income your investments may generate
- Your Centrelink or pension position
- Your ongoing aged care costs
- The effect of RAD/RAC retention arrangements
Your future financial needs
Every situation is different, and the most appropriate payment strategy will depend on your individual circumstances.
Need help with aged care finances?
If you are considering entering residential aged care or reviewing how you are currently paying for your accommodation, Holzworth Partners can help you understand the financial options available to you.
📞 07 3999 9751
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Important Information: This information is general in nature only and does not constitute personal financial advice. It has been prepared without taking into account your personal objectives, financial situation or needs. Before acting on any information, you should consider its appropriateness having regard to your objectives, financial situation and needs and seek appropriate legal, tax and other professional advice.
HWP Financial Pty Ltd (No. 440011) is a Corporate Authorised Representative of Continental Wealth Pty Ltd (AFSL No. 479263).