If anything, I would think it is too conservative.
The only thing I can think of is if someone is worried about the neighborhood declining and not having the opportunity to say "screw it" and let the bank foreclose.
I can think of quite a few more. Paying off the mortgage is
extremely risky for a number of reasons:
1. Paying off a mortgage only provides "safety" when the mortgage is fully paid. Prior to that time, a job loss, illness, divorce, or other financial crisis that interrupts the ability to make the payments could result in foreclosure--even if you have made substantial extra payments. The bank does not care, at all, about extra payments. They only care that you make the current payment. If the bank forecloses you are likely to lose all or most of your extra payments. On the flip side, if you were to simply contribute the same money to an investment account and if the same job loss, illness, divorce, or other financial crisis occurs, you could likely continue to pay the mortgage for years. One scenario (paying down the mortgage) results in losing your house. The other doesn't. Which is more risky?
2. The equity in your house is illiquid and expensive to access. Again, in the event of a job loss, illness, divorce, or even retirement the money is hard to get at if you need it or want it. Good luck refinancing your loan if you are unemployed.
3. Opportunity cost. This has been hashed about a lot, but bottom line is that over the life of a typical 30-year mortgage, at today's interest rates, other investments are likely to give much higher returns. You know, liquid investments that tend to appreciate, unlike your house. Or maybe you want to start a business. Or just retire. The bank, not you, determines if you can access your money. Often these opportunities are hard to quantify, but you are taking real risks that you will miss them.
4. Inflation risk. Although inflation has been tame for a while, it is a real thing. Just say, 15 years ago, 30-year Treasuries were paying 5-6%. 25 years ago they were paying close to 10%. That sounds like ancient history, but again most mortgages are 30 years. Will inflation come back? I don't know when, but it will eventually. If it does, people who have 3.5% mortgages will look like Einstein. Just ask the guy who got an 8% mortgage 25 year ago.
4b. Inflation risk, part II. Ask your parents, or some person old enough to have paid off their house, how much their first mortgage payment was. Chances are they will chortle and say something like "$400 a month!" Now of course, it isn't much money. But 30 years ago it was a lot. What happened was inflation eroded away that big payment and made it a small one. By paying down the mortgage, you do the opposite! You pay big money now in order to save a little money in the future. How does that make a lick of sense?
5. Misunderstanding the result. A lot of people think paying down the mortgage gives them a guaranteed rate of return. It does no such thing. Don't believe me? Let me illustrate. Open a 29% interest credit card. Spend like crazy. Pay it off every month. You are now getting a 29% guaranteed rate of return! That pretty much makes you the greatest investor of all time. In just a few short years of guaranteed 29% returns you will be richer than Bill Gates. Obviously, that's a dumb thing to say. Unless people are talking about mortgages, then the dumbness isn't so obvious for some reason. All you are really doing is avoiding a future expense. Don't get me wrong, avoiding future expenses is a fine thing to do. But it isn't the same thing as investing, by a long shot. And if you don't understand that, what else are you missing?
I've got a few more reasons, but that should be enough to get the point for now.
Preemptive Statement: At this point, someone usually points out that there are strategies for mitigating many of these risks. For example, open a HELOC before you need it and tap the equity that way, have sufficient liquid reserves before paying down the mortgage, etc. That's all true, these strategies do help mitigate the risks. But they don't explain why you should take the risk in the first place.