How many houses do they have mortgages over? Thousands? Tens of thousands?? Let's take 200 houses and do the math.
Each month these 200 houses repay - say - $2000 each.
The bank flips that money out to house number 201 as a new loan for 400,000.
Each month the bank now received $402,000 - can you see where this is heading? The math is simple even though the above example is uber-simple and not totally correct.. There is leakage in the system with all sorts of internal bits and pieces and the bank may choose to only loan $300k of the $400k etc. etc.
