Do Fed Funds rate correlate with indexes commonly used in Mortages ? They sure do.
I think there are two different concepts here.
FFR directly affects any other short-term rate, including ARM post-reset rates, usually tied to LIBOR. It is much more disconnected from long-term rates.

When translated to the housing market it means:

1. People with resetting ARMs get a huge bailout-like break.
2. People who are on the market for a home will hardly notice any difference (other than generally better mood at lender’s office)