$56k of earnings in exchange for freezing $70,000 of your income for 30 years? That seems insane if I'm honest.
If it were FU levels of money, or even 100%+ returns, I might think differently. But I can't imagine someone locking away $70k of their earnings for 30 years for only a 70% return.
To be fair, $7000 in 15 years probably won't get you the house downpayment but... you're right on the privileged part.
I imagine that people actually seeing some progress over time may encourage them to save/contribute a bit more, or to put some money in to somewhat larger CDs or whatnot (even excluding stock stuff). Or... they may be encouraged to contribute a small bit to a 401k if they end up at a job that offers it.
You may $40k/year - having, say, $3k in savings can really change your outlook and susceptibility to otherwise crippling 'emergencies'.
As a return for tying up 5% of your income (which is hard to do when you're working with a household budget of ~$625 a week) for 15 years? Yes, that is a tiny outcome. It's especially tiny when you consider that a static 3% APR is absurdly unrealistic.
You could use that same 5% and have a full down payment four years sooner.
To a lot of folks it is. That’s half a down payment for a house in a lot of the US.