Honest question. Why should society allow banks to give out mortgages for the purchase of residential property for use as a non-primary residence? It seems like this will lead to increasing the cost of rent because the renter pays the mortgage for the landlord plus profit.
Why shouldn't they be allowed to? It's just a secured loan.
Why should banks give out personal loans where someone can do whatever they want with the money? Why do credit cards exist? Why are brokers allowed to provide margin accounts?
> Why shouldn't they be allowed to? It's just a secured loan.
From the perspective of a bank it's a great deal. Either they get the premiums and interest on a loan or if the landlord defaults, they get the asset. But think of it in terms of the community. This helps concentrate wealth for the wealthy. People with lots of assets are more likely to qualify for a loan and they can afford higher house prices than those with less. This can cause cost of housing in residential areas to increase and lead to locking out new residents from becoming home owners in the area they live.
> Why should banks give out personal loans where someone can do whatever they want with the money?
Personal loans have higher premiums, higher interest rates and lower limits because they are not backed by high value assets.
> Why do credit cards exist? Why are brokers allowed to provide margin accounts?
The simple answer is that they are profitable to the providers.
I don't think high eviction rates are signs of a healthy society.
