Intermediation

Definition: The process by which financial institutions or other intermediaries connect savers and borrowers, gathering funds and supplying credit.

Example

A bank receives deposits and uses its funding resources to make qualifying loans.

Keep the distinction clear

Intermediation does not mean every deposited dollar is directly matched to one mortgage. Institutions use multiple funding sources and must manage credit, liquidity, and capital requirements.

Related terms

Disintermediation · Demand Deposit · Primary Mortgage Market

Keep studying

Primary and Secondary Mortgage Markets: Fannie Mae, Freddie Mac, and Ginnie Mae

References: FREC Course II syllabus: investment concepts · California DRE: real estate glossary

Pronunciation (US): in-ter-mee-dee-AY-shun (capitals show stress)

Pronunciation reference: Merriam-Webster