Who primarily benefits from the secondary mortgage market?

The primary beneficiary of the secondary mortgage market is mortgage investors. This market allows investors to purchase bundled groupings of mortgage loans, known as mortgage-backed securities (MBS). By doing so, investors can gain a stream of income through the interest payments made by homeowners on their mortgages. This market provides liquidity to the mortgage industry, enabling lenders to issue more loans by selling existing mortgages. This buying and selling process allows financial institutions to free up capital, which they can then use to provide new mortgages to homebuyers.

Although homebuyers do benefit indirectly from the secondary mortgage market due to increased mortgage availability and potentially lower interest rates, the direct and primary advantage lies with mortgage investors who effectively manage their portfolios and achieve returns on their investments through these securities.