If you bought a house for 1 million at lower rates and the price goes up

Only if you chose a fixed rate and only for the term of that fixed rate.

you pay more than the next person who buys an equivalent house for 950k, at the higher rate.

Did you mean to say less? This depends entirely on the rate and timeframe.

It’s still costly, but you pay less.

Again that depends entirely on fixed vs variable, fees, rate and timeframe.

This is not as straightforward as you’re making out, and even then you butchered your own argument.

The biggest issue is people ending up with negative equity and rising unemployment, it will end up with people losing their house and being in debt.