South African Home Loans Case Study

Simon Stockley founded SA Home Loans (SAHL) in 1999 to provide cheaper home loans to South Africans by using securitization. Securitization involves pooling mortgage loans into a special purpose vehicle that issues bonds to investors to fund the loans. This allows SAHL to bypass banks and offer loans at lower rates. While banks were dismissive of the competition initially, SAHL gained an 11% market share in its first 5 years by undercutting bank rates. One hurdle was determining SAHL was not classified as a bank, which allowed it to operate more efficiently through securitization rather than traditional banking regulations.