Secondary Market
Direct definition
The market where lenders sell existing mortgages to investors, freeing capital to make new loans.
Written by the Vabasso Mortgage Editorial Team · Reviewed against agency and federal sources · Read our editorial policy for how we research and review mortgage content
Plain-English explanation
Fannie Mae, Freddie Mac, and private investors buy loans in the secondary market and often bundle them into MBS.
Why it matters
The secondary market is why standardized underwriting exists — and why mortgage rates move with bond yields.
Where you may see it
- Servicing transfer notice
- Investor disclosures
A real-world example
Your lender sells your loan to Fannie Mae within weeks of closing to replenish capital for new lending.
Educational and illustrative only
A common misunderstanding
Selling a loan on the secondary market doesn't change the borrower's loan terms — it typically only changes who owns or services the loan.
Ask Vabasso AI
This glossary provides general educational information. Mortgage terminology, qualification methods, forms, timelines, fees, program rules, and legal meanings may vary by lender, investor, loan program, property, occupancy, state, and transaction. Definitions do not represent loan approval, legal advice, tax advice, or a commitment to lend.
- Author
- Vabasso Mortgage Editorial Team
- Reviewed by
- Vabasso Mortgage Licensed Advisory Team
- Last reviewed
- July 30, 2026