The default rate across banks' multifamily and commercial real estate loans fell to 0.8 percent in the third quarter of 2015, the lowest level since before the beginning of the Great Recession and just a fraction of the crisis peak of 4.3 percent. The multifamily default rate was just 0.3 percent; the commercial default rate, 1.0 percent.

While CMBS investors and policymakers remain concerned about pending maturities of ten-year loans securitized in 2006 and 2007, the composition of the national bank balance sheet looks quite different. In the case of the latter, banks' shorter term legacy loans from before the crisis have burned off almost entirely.

Commercial real estate investment and pricing conditions are expected to continue their upward trajectory heading into 2016. Nonetheless, bank loan performance is likely to reach an inflexion in the coming quarters. As we progress deeper into the current expansion, the share of loans originated later in the recovery and with less conservative underwriting standards is on the increase.

At least on the margin, some of these shorter duration loans—from 2013 and later—will face challenges in refinancing cleanly and without the injection of new equity. If mortgage interest rates rise materially over the year, that small share of defaulted loans will likely grow.