Back on July 13, when the BOC hiked rates by 25bps to 0.75% - its first rate hike in 7 years - followed by another unexpected rate hike in September, we documented some troubling trends among Canadian households, including the record household debt-to-income ratio...

... the sliding average hourly wages...

... as well as the unprecedented Canadian housing bubble which puts US home prices to shame...

... followed by a just as troubling observation that Canadian reliance on housing has never been greater in the form of loans secured by property reaching an all time high...

... we warned that the combination of rising interest rates and Canada's record reliance on debt, would be a dangerous combination.

Our fears were confirmed three months later, when BNN reported that a survey released yesterday found that almost half of Canadian households don’t feel financially prepared for further interest rate increases.

According to the Ipsos poll, conducted on behalf of MNP, 40% of respondents said they fear ending up in financial trouble if rates go up much higher, with one-in-three already feeling the impact of higher rates.

“It’s clear that people are nowhere near prepared for a higher rate environment,” MNP President Grant Bazian said in a release. “The good news is that there seems to be at least the acknowledgement now that rates are going to climb which might make people reassess their spending habits – especially using credit.”

It gets worse: 42% of respondents said they don’t think they can cover basic expenses over the next year without going deeper into more debt. The same number said they're within $200 of not being able to cover monthly expenses. This familiar "ponzi state" means that more than 4 in 10 Canadians effectively have no savings, which is ominously similar to US trends: as we reported earlier this year, a quarter of American adults can't pay all their monthly bills, while 44% have less than $400 in cash.

The Ipsos poll also found 70% of Canadians said they will take a more cautious approach to spending amid higher interest rates, which may be enough to choke off any economic growth and make the Canadian rate hikes a "one and one". affair

Concern about rising rates is greater among lower-income Canadians - those who tend to rely on credit cards - according to the survey, as opposed to homeowners who said they are a bit more optimistic they can absorb a rate increase of... a whopping 1%.

Geographically, over half of Albertans say they’ll be more concerned about paying off debt if interest rates rise, which is more than those in British Columbia and Quebec, where less than half said they are worried. Meanwhile, Ontarians are the least concerned (44 per cent) about their ability to pay down their debts.