The BTC isn't MORE valuable; the items you buy are LESS costly (1 BTC = 1 BTC). You don't pay the loan back with something that is inflatable (USD); You pay it back w BTC.
You borrow 1 BTC to buy a house w 1% interest. 10y later you have worked enough to pay off that 1.1 BTC. The house now costs less BTC.
Does that answer you? I feel like there's more to it.
