My 5 year arm which doesn’t reset until September, 2010 is based on the 1 year treasury CMT plus 2.75%. The current rate is 4.625%, and the adjustment caps are 2% annually and 5% lifetime. So the cap on my rate increase in September, 2010 would be 6.625%. If 1 year treasuries hold where they are today (around 4%) then it doesn’t make a difference because that would give me a rate of 4+2.75 = 6.75% which is higher than the cap of 6.625%.

This is only one example so please don’t try to extend this to the entire rest of the market. Saying the interest rate cut will make no difference is a bit of a stretch as it will still allow a lot of buyers to refinance into a fixed rate product. But there are a lot of people underwater, or soon to be and things could get ugly because they won’t have the option to refinance.