What is a key feature of the secondary mortgage market?

The secondary mortgage market is primarily designed to enhance the flow of mortgage funds, making option B the most accurate choice. In this market, existing mortgage loans are bought and sold, allowing lenders to offload their loan portfolios and thus have available capital to fund additional loans. This process not only increases liquidity in the mortgage market but also offers lenders the ability to manage risk effectively and make mortgages available to a larger number of borrowers.

The functioning of the secondary market is critical because it helps stabilize mortgage rates, making it possible for borrowers to obtain loans under varied economic conditions. This market can involve a mix of private investors and government-sponsored entities, facilitating the buying and selling of mortgage-backed securities and providing a platform for the continuous flow of funds needed to support housing finance.

The other options, while related to the mortgage market, do not accurately capture the main feature of the secondary mortgage market. For instance, the market does not restrict itself to government entities, does not mandate fixed interest rates as mortgages can be issued at various rates, and does not prohibit the sale of mortgages—in fact, selling mortgages is a pivotal aspect of its operation.