Reasons are: Margin loans, unlike mortgages, are not fixed in duration, are not fixed in interest rate, are secured on assets at a certain market value (or range) rather than secured on an asset disregarding it’s future fluctuations in market value.
- The stock market is much more volatile than the housing market. So prices go up and down more frequently and violently in the market.
- This exacerbates the problem that margin loans are not 30 year fixed. They are of no set time (can be called whenever the lender wants) and no set interest rate (interest charged can be changed rapidly by the lender), and they are secured by your stock portfolio at a certain value (whereas mortgages are just secured by the property, regardless of shifts in value). So if the market dips, you will get a margin call, and you will need to pay off some of the loan, either with extra cash, or by selling some of your stock. If the market keeps going down you could easily end up selling all of your stock, and still owing debt on the margin loan. You may have meant to be a buy and hold investor, but you were forced to become a sell low investor. Even if the market goes sidways or up, if interest rates are going up, the interest rate on your margin loan will go up too. It is not a fixed rate, like a 30 year mortgage. This could well cut into your returns in a decent market.
If you could take out a 30 year fixed interest margin loan, secured on your stocks (regardless of their market value), at the same interest as a mortgage, then it would be more comparable to investing rather than paying down a mortgage. But, you cannot.
So, you are comparing apples with pears. And the pears are not a good idea.