Despite a hectic August, commercial real estate bank lending did amazingly well last quarter. So well, in fact, that it’s done the unthinkable: the default rate for multifamily and commercial loans fell below 1% for the first time since 2007. According to a report by Chandan Economics, the combined multifamily and commercial default rate fell to 0.9%, with multifamily at 0.3%. That’s quite the drop from the 2006 and 2007 pre-crisis peak, which boasted a commercial default rate of 1.1%. Multifamily lending has actually been slowing down, sitting at 11.8% in Q2 ’15, as opposed to 15.9% in Q2 ’14. The report also notes that construction lending has done well as the sector has remained strong and banks have worked past their legacy exposures, dropping to a 1.6% default rate from 16.8%. But Chandran CEO Sam Chandran (pictured) is not resting easy just yet, noting that “the improvement in the default metric reflects both the declining balance of non-performing loans as well as the growth in net new bank lending.” With increased lending in Q2 ($22.2B for multifamily and commercial, $9.7B for net construction), the lending market is becoming increasingly competitive and banks might introduce dangerous refinancing risks to protect market share. [GS]