Which market brings together borrowers and lenders to create terms for mortgage transactions?

The primary market is where borrowers and lenders engage directly to negotiate and create the terms for mortgage transactions. In this market, lenders, such as banks and financial institutions, provide funds to borrowers who are looking to purchase real estate or refinance existing mortgages. The primary market is essential because it establishes the initial mortgage terms, including interest rates, loan amounts, and repayment schedules.

In contrast, the secondary market deals with the buying and selling of existing mortgages and mortgage-backed securities. This market does not involve the original borrower or lender in the creation of mortgage terms but rather focuses on investors purchasing these financial instruments. The correspondence market is typically a term used to refer to lenders who originate loans and then sell them to larger financial institutions, while the tertiary market is less recognized in the context of mortgage transactions. Thus, the primary market is the fundamental arena for establishing mortgage terms between the involved parties.