You are underestimating the costs and risks to the bank
The basic idea here is that buying a house isn't a cost-free process, owning and renting a house isn't cost-free or risk-free, dealing with a delinquent tenant isn't cost-free or easy, and the bank doesn't get much value out of your happiness or housing satisfaction.
Buying a house costs a lot of money. You have to pay the purchase price, outbidding other interested buyers, pay fees along with the purchase, and so on. So from the second the bank buys the house (if they were to do so), they would have a pretty sizeable liability on their books. That's not appealing for a business focused on the finance side.
Owning and renting a house out are not free, either. As long as the bank owns the house they will have to pay taxes on it, and possibly other fees (like HOA fees, if they apply), are responsible for repairs and maintenance, and so on. The issue isn't so much the expenses of that but rather the overhead of tracking all of it, managing the work, collecting the rent from you, dealing with the tax filings, and that sort of thing. To keep the house in good condition and up-to-date with what current buyers like, they have to do more work to know what those trends are and pay out to keep the house value up. Is now the time to put in quartz countertops? Will the bank even get their investment back if they do?
The bank also has to face some risk from working with you. You might feel that you would be totally honorable with everything here but the bank certainly won't be so confident of that. If you don't pay the rent for a couple of months, the bank has to spend money and time dealing with you and getting the money. If they have to go to court to get paid, that costs even more money. What if you don't keep up with basic maintenance, causing more expensive problems down the line? What if you do some modifications yourself, but not that well? What if you trash the house, especially if they have to evict you?
There are a lot of ways that you could degrade the value of the house while living there, and there are plenty of renters that don't take very good care of the property they live in because it isn't theirs-- it doesn't matter to them if the cash value drops. You promising you won't do that isn't a very compelling argument no matter how serious you are.
And the idea that houses will definitely increase in value, or even hold their present value, is definitely not true. Famously, there were a few banks with that as a guiding ideal that didn't survive past the first decade of the 21st century. The bank is also almost certainly looking at competing options for investing its money-- it's not buying the house to rent to you vs. keeping a pile of cash in a vault, it's buying the house to rent to you vs. their most-likely-to-pay-off investment.
Balanced against all of these risks and concerns is one single thing: you would be happier living in the house. That's worth basically nothing to the bank and isn't part of its business at all. Why would the bank want to enter into this arrangement with you when they could write a mortgage to someone else and not deal with the extra risks and headaches?
It's a very slightly worse in your case because you have assets you could use to secure the property but don't want to spend them down. You want the bank to tie up its cash in this house for you, but don't want to spend the value of things you already own to get it. The bank doesn't want to dump money into a lower-return investment any more than you do.