Default rates among subprime loans rose 56.5% - or 187 of the 331 metropolitan statistical areas in October 2005 from the year-ago period, according to Friedman Billings Ramsey. On average, however, the default rate for subprime loans fell to 6.16% from 6.38%.

FBR is forecasting subprime loan default rates in 311 MSAs to rise to 6.68% this October, up from the 6.16% delinquency rate reached in October of 2005. "We attribute the increase to the ineveitable surge in default rates in the 10 MSAs affected by Hurricane Katrina, to continued weakness in the 56 MSAs, and to the natural aging of the stock of subprime loans."

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