Simply put, the fourth quarter was a bonanza of bank lending for commercial real estate projects, according to the study. Banks' net lending to multifamily and commercial real estate increased by $46.6 billion during the fourth quarter, the largest quarterly year over year increase in Chandan Economics' records, going back to 2003.

Commercial mortgage balances increased by a net $31.6 billion for the quarter. Again, this was the largest quarterly increase since the company began record keeping. Similarly, the $15 billion quarterly increased posted by the multifamily sector is the largest quarterly increase in Chandan Economic's records for that property type.

Not surprisingly with this level of activity, underwriting is becoming more aggressive, CEO Sam Chandan tells GlobeSt.com, per the company's loan-level analysis. In some places, he said, such as gateway and primary markets, “there is an intensely competitive lending environment, indicating a need for caution.”

And that joint statement by the Fed, FDIC, and OCC? “In our view, that guidance was appropriate,” Chandan says.

Default Rates Continue to Drop

Fortunately, default rates continue to drop. Here, Chandan Economics highlighted another benchmark: the default rate on multifamily and commercial mortgages held by banks fell to 0.73% in the fourth quarter. This was the lowest level since Q2 2007.

The default rates on multifamily mortgages continued their downward plunge as well, reaching a mere 0.28% for the quarter, the lowest point in nearly a decade, since Q1 2006.

Ditto the commercial mortgage default rate. It fell below 1% for the first time since Q4 2007.

Bank lending, in short, is on an entirely different planet compared to what is happening in the CMBS space. “Bank balance sheets are in an altogether different place, relieved of the legacy loans made before the crisis,” Chandan says.

WASHINGTON, DC—Last December a triumvirate of the federal banking regulators — the Federal Reserve, the Federal Deposit Insurance Corp. and the Office of the Comptroller of the Currency — issued a not-so-subtle reminder to banks: Existing guidance contains “prudent risk-management practices” that financial institutions should apply in the management of their commercial real estate lending activity. “Financial institutions should implement risk-management practices and maintain capital levels commensurate with the level and nature of their CRE concentration risk,” the interagency statement said.

The statement was released in the middle of December, too late to much impact on CRE lending volumes for the fourth quarter.

Now, a Chandan Economics analysis of bank CRE lending figures and default rates set to be released this week adds some context around the regulators' statement.

A Bonanza of Lending

Simply put, the fourth quarter was a bonanza of bank lending for commercial real estate projects, according to the study. Banks' net lending to multifamily and commercial real estate increased by $46.6 billion during the fourth quarter, the largest quarterly year over year increase in Chandan Economics' records, going back to 2003.

Commercial mortgage balances increased by a net $31.6 billion for the quarter. Again, this was the largest quarterly increase since the company began record keeping. Similarly, the $15 billion quarterly increased posted by the multifamily sector is the largest quarterly increase in Chandan Economic's records for that property type.

Not surprisingly with this level of activity, underwriting is becoming more aggressive, CEO Sam Chandan tells GlobeSt.com, per the company's loan-level analysis. In some places, he said, such as gateway and primary markets, “there is an intensely competitive lending environment, indicating a need for caution.”

And that joint statement by the Fed, FDIC, and OCC? “In our view, that guidance was appropriate,” Chandan says.

Default Rates Continue to Drop

Fortunately, default rates continue to drop. Here, Chandan Economics highlighted another benchmark: the default rate on multifamily and commercial mortgages held by banks fell to 0.73% in the fourth quarter. This was the lowest level since Q2 2007.

The default rates on multifamily mortgages continued their downward plunge as well, reaching a mere 0.28% for the quarter, the lowest point in nearly a decade, since Q1 2006.

Ditto the commercial mortgage default rate. It fell below 1% for the first time since Q4 2007.

Bank lending, in short, is on an entirely different planet compared to what is happening in the CMBS space. “Bank balance sheets are in an altogether different place, relieved of the legacy loans made before the crisis,” Chandan says.