REEDC New York Real Estate Salesperson Practice Test 2026 - Free Real Estate Salesperson Practice Questions and Study Guide

The secondary mortgage market is where lenders and investors buy and sell mortgages or mortgage-backed securities. This market plays a crucial role in the overall economy and the housing finance system, as it provides liquidity to the primary mortgage market, where borrowers find loans directly from lenders. When lenders can sell mortgages in the secondary market, they can free up capital to issue more loans, thus helping more buyers access home financing.

In this context, the secondary mortgage market is essential for maintaining the flow of mortgage credit, stabilizing interest rates over time, and allowing lenders to reduce risk exposure by transferring those loans to investors. Unlike the primary mortgage market, where lenders originate loans directly to borrowers, the secondary market focuses on the buying and selling of existing loans or mortgage securities. This distinction is key in understanding how mortgage financing operates on a broader scale.