What market facilitates liquidity for the primary mortgage market by buying loans?

The secondary mortgage market is the correct answer because it is specifically designed to provide liquidity to the primary mortgage market by purchasing loans. In this market, financial institutions and investors buy existing mortgages from lenders, which allows those lenders to free up their capital to issue more loans. This continuous cycle helps maintain a steady availability of funds for borrowers in the primary mortgage market.

In addition to facilitating liquidity, the secondary mortgage market plays a crucial role in stabilizing mortgage rates and managing risk for lenders. By absorbing large volumes of loans, it allows for greater investment opportunities and diversification for investors in mortgage products.

The other options listed have distinct functions that do not directly relate to the act of buying loans from lenders to provide liquidity. For instance, real estate investment trusts primarily focus on owning and managing income-producing real estate, while the mortgage-backed securities market involves creating investment products made from pools of mortgage loans, rather than directly purchasing the loans to provide liquidity. The primary mortgage market, on the other hand, is where loans are originated and does not serve the purpose of purchasing loans after they are issued.