Mortgage holders feel the pain as dollar climbs

Isaac Buame felt his dreams had come true two years ago when he moved his family into a plush three-bedroom house in a gated-community east of the Ghanaian capital Accra. It was not until January that he began losing sleep.

The reason: a huge fall in the value of Ghana's cedi currency, which has more than doubled the cost of repayments on his $90,000 mortgage, which he took denominated in U.S. dollars to secure lower interest rates.

"It's become an albatross around my neck and it must go quickly for me to have my life back," Buame said.

His predicament highlights the challenges faced by consumers in emerging economies like Ghana as the strength of the U.S. currency pushes up the cost not only of imports like cars and electronics, but also of dollar-denominated loans.

In Ghana this is holding back the growth of a rising middle class by stunting the development of the mortgage market. It is also deterring private investors from funding the estimated 1.7 million new homes the government wants built in the next 10 years to address an acute housing shortage.

"The investments can only happen when the private partner is guaranteed a stable market and some predictability in the general economic outlook," said economist Sampson Akligo of Investcorp Ghana. "From what Ghana is experiencing, it appears the country is not there yet."