It's not exponential. And even though 5% is 66% higher than 3%, the monthly payment is $5,368 instead of $4,216 on 1m which is 27% higher. Sure you pay twice as much interest over 30 years.
Do you think a typical homebuyer stretching themselves in the heated market of the past 2 years can easily absorb a 27% increase in their payment? I have my doubts.
How is a compounding loan (such as a mortgage) not exponential?
Because you're paying it off faster than it grows. It would be exponential if you were allowed to simply let it sit without paying it down, but that would break the contract and get you foreclosed.
It's absolutely exponential - it's just that the base is barely over one and the exponents involved are not very large.