If your clients are inquiring about the Federal Funds Rate cut on Tuesday here is some information that can help you explain what it is and how it does/doesn't affect mortgage rates.
1. When the Feds cut the Federal Funds Rate, it does not mean that they are cutting mortgage interest rates. The Federal Funds Rate is the interest that banks charge each other, it has nothing to do with long term mortgage interest rates (however, it DOES affect short-term rates like those who have a home equity line of credit). Can a change in the Fed Funds Rate affect mortgage interest rates? Yes...indirectly. I all depends on how Wall Street reacts and responds to the change. If investors start buying up groves of 
stocks, mortgage interest rates will go up. Conversely, if investors start dumping money into bonds, mortgage interest rates will go down. Just as we have witnessed in the last 6 months, the Feds cuts have had both a negative and positive effect on mortgage rates.
2. If you really want to get a "read" on mortgage interest rates, watch the 10 year treasury bond. Mortgage rates are closely tied to this bond's performance. When the price of the bond goes up (meaning investors are dumping money into bonds, thus driving the price up), mortgage rates will go down. On the other hand, when the treasury bond's prices fall, mortgage rates will go up. In the last 36 hours, the 10 year treasury bond price has TANKED and we saw the effect of that...mortgage rates sky rocketed. Why? Because investors were buying up stocks and the stock market regained strength, sending mortgage interest rates up.
Keep in mind, that while the Fed determines the fate of short-term interest rates, they do not directly call the shots on long-term interest rates (what you might pay on a 30-year fixed loan). Instead, long-term rates are determined by investors who buy and sell bonds in the bond market, which changes daily. The Fed funds rate is an indirect factor in the big picture of determining long-term rates, but not as large a part as many people think.
On the flip-side, however, the Fed cut also means you're now making less on your savings. In other words, if you have a savings account, money market account or CD, you're earning less in interest on your money.
Hope this helps!
MN Mortgage Mom
