Circulate the Mortgage Money Supply

The secondary mortgage market exists to ensure that money continues to flow available for homebuyers. If a local bank lent out all its cash to borrowers and had to wait 30 years to get paid back, it would run out of money to lend very quickly. The secondary market solves this by buying those loans from the bank, giving the bank fresh cash to lend to new borrowers. This cycle relates to two key economic concepts: "intermediation," where individuals deposit money into financial institutions (banks) which then lend it out, and "disintermediation," where individuals withdraw their money to invest directly in other instruments (like stocks or bonds), bypassing the bank and reducing the available mortgage money supply.