What characterizes the secondary mortgage market?

The secondary mortgage market is primarily characterized as the realm where loans made in the primary market are sold and traded. In this context, the primary market refers to the initial stage of mortgage lending, where lenders provide loans directly to borrowers. Once these loans are issued, they can be sold to investors in the secondary market, allowing lenders to recoup their funds and potentially issue more loans.

By facilitating the buying and selling of existing mortgages, the secondary mortgage market plays a crucial role in providing liquidity and stability to the overall mortgage industry. It helps to ensure that capital is available for ongoing lending to consumers, which can contribute to lower interest rates and enhanced access to mortgage credit.

The focus on selling loans rather than creating new ones distinguishes this market from the primary mortgage market and highlights its vital role in the overall housing finance system.