Yesterday was historic on two counts and both will impact on Canada. Firstly Barack Obama was sworn in as the 44th President of the United States. At a time when people are looking for hope he seems to be the right person in the right place. I don’t think his election will change the US economy overnight but he does appear to understand the magnitude of the problem and he certainly seems to inspire hope. The best thing for the US economy right now might be for people to believe that things will get better. And if things start improving in the US economy it will help our economy as well. The other historic event was a little closer to home. The Bank of Canada dropped their key-lending rate by ½% the lowest level since 1958. Most lenders immediately followed by dropping their prime rate by the same ½%. As of today most lenders have set their prime rates at 3%. This is great news for those on a variable rate. If you have an existing variable rate mortgages of the prime minus variety your rate will drop to the low to mid 2% range. Here is an idea if you are in a variable rate mortgage that resets the monthly payment with each rate drop. Ask the lender keep your payments the same and take this opportunity to reduce the amount you owe on your mortgage. You will be mortgage free sooner and save a lot of money on interest costs especially when rates eventually go up.