What type of market does Farmer Mac relate to?

Farmer Mac, officially known as the Federal Agricultural Mortgage Corporation, operates within the secondary mortgage market. This market is key for the funding of loans, including those for agricultural purposes. It provides liquidity to lenders by purchasing loans from them, thus enabling these lenders to offer more mortgages. The role of Farmer Mac is particularly important for rural and agricultural financing, as it helps to facilitate access to capital for farmers and ranchers who might otherwise face challenges obtaining loans through traditional means.

The secondary mortgage market, unlike primary markets where loans are originated, focuses on the buying and selling of existing mortgages, which contributes to maintaining the flow of credit in the agricultural sector. This mechanism allows lenders to manage their risk and enhance their lending capacity by freeing up capital.

In contrast, the other market types listed do not relate to Farmer Mac's primary function. The consumer finance market typically involves loans made directly to consumers for various personal expenditures, the international loan market deals with loans across national borders, and the short-term credit market involves financing that lasts for a brief period, often utilized for immediate cash flow needs rather than the longer-term agricultural financing that Farmer Mac emphasizes. Thus, understanding Farmer Mac's function within the secondary mortgage market reveals its pivotal role in supporting the agricultural economy.