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Some of this might be your expectation of housing costs? A 220k mortgage, even at 7.5% interest, is still affordable on a 130k salary. This works out to < 25% of your after-tax income which is pretty average or maybe lower than average (unsure if most affordability stats are quoting pre or post-tax income).

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I don’t understand what that 220k mortgage actually bought… a broom closet? A parking space? A tiny house in a countryside town far from anywhere?

The 220k is the value of the mortgage and not the original purchase price; there was most likely a downpayment at time of purchase. Or, they recently renewed their mortgage and the remaining amount owing is 220k.

tbh the hypernormalization of needing to go in debt and pay interest for a home is extremely scary, regardless of the rate

It's been that way for almost a hundred years. It's not so scary when interest rates and values have stayed relatively steady (as they have in most of the post-ww2 era in inflation-adjusted terms). All that seems to have fallen apart around the year 2000 (when interest rates were made lower than they should have been).

To the extent that government tinkering in the lending market ends up making housing more expensive, we should at least treat it as a policy failure.

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