Named a Five Star Mortgage Professional for his commitment to service and his professional expertise, Gavin Ekstrom maintains a focus on the needs of home loan borrowers. Gavin Ekstrom currently serves as senior area manager with Denver, Colorado’s Citywide Home Loans, in which position he draws on a detailed knowledge of the secondary mortgage market and its impact on interest rates.
The secondary mortgage market is a system by which lenders can sell the loans that they have offered to borrowers. It was implemented by the United States Congress in the 1930s so as to increase the amount of capital available to lenders, thus making homeownership more accessible.
The secondary mortgage market primarily operates in the form of the financial institutions Fannie Mae and Freddie Mac. These institutions purchase a number of mortgage products from private lenders, which can then offer that money to other borrowers. Meanwhile, the purchasing institution bundles the mortgages that it has bought into securities and sells them to investors.
Demand from these investors is partially what drives the rise and fall of mortgage rates. If the economy is doing well and stock prices are high, investors will demand higher yields from the secondary market. This leads to mortgage rate increases, just as lower demand in periods of economic downturn leads to lower rates.