Suppose someone rents a home. Suppose that person's income unexpectedly declines, like if that person becomes unemployed. That person can give up the rented home and move in with friends or family.
Suppose someone owns a home with no mortgage. If that person becomes unemployed, that person still has a place to live.
Suppose someone owns a home with a mortgage. If that person becomes unemployed, that person will be unable to pay the mortgage, and will be bankrupt, and will lose the home.
Home mortgages make people more vulnerable to loss of income. A person with a home mortgage is more badly hurt by a loss of income than a person without a home mortgage. A person with a home mortgage is more likely to need government assistance.
Someone with a home mortgage should be more afraid of losing income than a person without a home mortgage. Home mortgages make people stressed, worried and unhappy.
The same is true for all other forms of consumer debt.
People should not borrow money to buy homes. If someone cannot afford to buy a home without borrowing money, that person should rent a home instead of buying.
Government subsidies for home mortgages also cause people to buy bigger homes than they want; because the bigger the home, the bigger the mortgage; and the bigger the mortgage, the bigger the subsidy. This diverts economic resources into housing and out of everything else. Government subsidies for home mortgages also cause sprawl.
The government should not subsidize home mortgages. Home mortgages should be treated the same as other forms of consumer debt. Maybe the government should impose a sin tax on consumer debt, to discourage consumers from going into debt.
The road not taken; The Economist magazine; March 21-27 2009; page 31; says home ownership prevents people from moving to take advantage of better opportunities elsewhere, which makes people poorer. "A decade ago Andrew Oswald of the University of Warwick in Britain argued that excessive home-ownership kills jobs." Also see Shelter, or burden; The Economist magazine; April 18-24 2009; pages 76-78.