Believe it or not...if the fed rates drop then the mortgage interest rates are going to go up.
The FED arent lowering the 'fed funds rate', but they are lowering the 'discount rate'.
Fed funds rate affect the Prime Rate. Prime rates ONLY affect 2nd mortgages, credit cards, and student loans.
A few weeks ago, they lowered the discount rate and the mortgage rates went up. When the FED comes in to save the economy, the consumers gain MORE confidence. This is why you saw the market go up when they lowered the discount rate. If the market is doing good then the mortgage rates are going to be high. Mortgage rates are affected by the 10yr bond rates. If the market is doing well....nobody will want to invest it in bonds! As you noticed the market has been going down, and so have the mortgage rates. 9/11 was a perfect example of when the market crashed....and the mortgage rates were at its lowest.
Cross your fingers!