“why banks increase their risk portfolio by lending to people when a mortgage payment is 41% of a person’s income.”
At the end of the day there is a government bailout.
Heads they win, tails we lose.
You are absolutely correct. Therein lies two major problems: how banks and government operate. There is no escaping disaster, the default of both. Bailouts have a limit. There comes a time when there is no more money to bailout unless hyperinflation results.