That's precisely it. Normal people interpret loans as loans. Bank has money. Bank loans money. Bank makes interest to get more money.

They're participating in the system, and not only do they have no clue how it works, but believe it works in a way that it hasn't for generations.

33% (or slightly more) of homeowners have no mortgage at all.

Edit - Some sources:

http://www.ritholtz.com/blog/2012/04/debunking-the-housing-r...

http://www.irishexaminer.com/ireland/kfsneyqlidgb/rss2/

Realy moded down try looking at house prices in London compared to SV before you pull the trigger