I'm all for investment, but the problem is that there isn't an arbitrary amount of resources to invest in, nor an arbitrary supply of people to do the jobs you want to pay for with that extra money.
As such, if you pour money in you will inherently drive up prices, and inflation is effectively equivalent to applying an extra tax on everyone.
The notion that you can just pour money in and improve everything works at a household level, but is just an incredibly naive view in terms of a national economy.
It's a balancing act.
At the same time Norway, like every other country in the world is heading for a demographic time bomb nobody knows how to prevent, and so holding back money to be able to pay for that without e.g. drastically cutting back pensions and the like matters. Especially given that the "oil fund" is technically a pension fund.
With respect to mortgages, home ownership in Norway is very high in part because buying a house is affordable to the average Norwegian, in part because Norway is one of only a very small number of countries to let you deduct mortgage interest from taxable income.
But make them too cheap for supply of housing to keep up and all you do is drive up the prices and you're back to square one. Another way of saying that: Housing will "never" be cheap, because if house prices drops or interest drops or salaries go up, people buy bigger/better placed houses. We're nowhere near the housing quality where enough people go "oh, my house is big enough / in the most perfect location, I won't bother moving" if they suddenly find they can afford much more.
