What usually characterizes the primary mortgage market?

The primary mortgage market is characterized by transactions that involve direct lending by financial institutions, such as banks, credit unions, and mortgage companies, to borrowers seeking loans to purchase real estate. In this market, the lending institution originates the mortgage, providing the funds directly to the borrower and setting the terms of the loan. This primary interaction focuses on the creation of new loans rather than the buying or selling of existing ones.

This contrasts with the secondary mortgage market, where existing loans are bought and sold among investors, such as in the case of mortgage-backed securities. The presence of various loan types, including fixed-rate and adjustable-rate mortgages, can make the primary market diverse, but it is not limited to fixed-rate mortgages specifically, and loan restructuring is not a primary function of this market. Therefore, the direct lending aspect is the hallmark feature that defines the primary mortgage market.