Exactly. Here in the Netherlands, housing is also subsidized: you can roughly subtract the mortgage's interest from your income before tax is calculated. The only result is that houses are more expensive.
The purpose of that system is to have more people owning their own home and fewer people renting. It assures that there is a cap on how much of the housing is owned by companies for the purpose of renting it out.
Oh mortgage tax deduction is old hat in the states, this is on top of that.