Federal Funds rate is basically an extremely short term target rate (overnight). As such it has the greatest effect on short term loans. 3 year arms will see a larger downward influence than 5 year arms, and the correlation on a 30 year loan is basically non existant. The rate cut may indirectly lower 30 year rates through improved liquidity and willingness to lend by banks.
Since I despise statements made without data to back them up:
3 year arm history for the last 5 years, note that it mostly tracks federal funds rate, although there is a lot of interim volatility. The correlation is there but not direct, a 1% change in federal funds rate only results in around a 0.5% change in the 3/1 Arm rate:
[img_assist|nid=4842|title=3 year arm|desc=3/1 Arm mostly correlates with Fed Funds Rate|link=node|align=left|width=466|height=424]
5 year arm history for the last 5 years, again it mostly tracks the federal funds rate. However the relationship is even less direct, with 1% change in rates resulting in around a 0.25% in 5/1 Arm rates:
[img_assist|nid=4843|title=5/1 Arm and Federal Funds Rate|desc=|link=node|align=left|width=466|height=424]
30 year conforming history for the last 5 years. There is really no correlation here, a better estimator for long term mortgage rates are 10 year treasury yields as advocated by SD Realtor. After the rate cut today 10 year treasury yields dropped by only about 1 basis point so don’t expect to see a huge change in conforming rates. That being said rates may still come down more than usual given the higher than historical premiums over treasury yields:
[img_assist|nid=4844|title=30 Year Conforming Rates|desc=|link=node|align=left|width=466|height=424]
