If you’re not wealthy, loans may be the only way for you to afford a home. The idea of banning loans must seem crazy, but bear with me for two minutes while I share some thoughts.
After all, the three Abrahamic religions originally banned loans that charged interest. Though Christianity and Judaism have since decided that loans with interest are now fine, and Muslims have found ways around it too.
Still, it shows that our ancestors realized that allowing the wealthy to loan money for their profit is a bad thing. Obviously, if a loan is the only way you can buy something, you will disagree. But it does make it easy for those with wealth to make more wealth, without having to do anything. And that seems at odds with capitalism which is meant to reward those who work hard.
Though it helps explain how, since 1989, the poorest 50% of Americans have seen their wealth share decrease by 28.57%, while the wealthiest 1% have enjoyed an increase of 39.91%. So now the wealthiest 10% have managed to hoard 68.3% of all US wealth, leaving the poorest 50% to share just 2.5% between them.
There’s another issue with loans and capitalism, too.
Capitalists say that the balance of supply and demand sets prices that are fair to buyers and sellers.
In 1985, the average price of a US house was 3.5 times the median US income. In 2025, it had increased to 5.1 times the median income.
We could say that’s merely to be expected with the population increasing by about 100 million increasing demand. However, supply has also increased, with the ratio of housing units to population rising fractionally.
Of course, despite there being relatively more housing, demand has increased because more people are buying additional homes to rent out. It’s a way for wealthier people to gain wealth from poorer people. And it’s driven by even wealthier people loaning money to them.
In effect, loans push up housing prices because people have more money available to them. If people weren’t able to borrow money to buy more than one house, the average house price would probably still be 3.5 times the median salary.
However, things are more likely to get worse. The wealthy have realized that if they lend people money over 50 years, instead of 25 or 30 years, people can borrow more money because the repayments will be lower. And the wealthy will be able to earn even more interest.
Of course, loaning people more money means that in 40 years, the average house price may be 6.7 times the median salary.
Clearly, we can’t ban loans, but should the interest on loans for essential things (such as a main home) be lower than for non-essential things (such as additional homes to rent)?
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