Despite undertaking their own multi-billion dollar internal residential mortgage securitisations, banks are big buyers of their peers' RMBS issues too. This is because their own RMBS attract a greater discount rate from the Reserve Bank when used in repurchase transactions.Under Basel III, banks are under pressure to boost their holdings of repo-eligible liquid assets and, thereby, their liquidity coverage ratios. And, while the Reserve Bank stands ready to provide additional liquidity in need, via the Committed Liquidity Facility, banks are keen to avoid the cost of using it.Outside of Commonwealth and some state government bonds, and some Australian dollar denominated bonds issued by 'AAA' rated supranationals and foreign government agencies, the 'AAA' rated tranches of prime RMBS are the only other source of repo-eligible liquid assets available to banks.Prime RMBS issuance has boomed in 2013. Year-to-date issuance already totals A$22.7 billion, which is a post-GFC record and is the largest volume of prime RMBS issued since 2007. In that year, $41.9 billion of prime RMBS was issued. There has also been no support for the prime RMBS market from the Australian Office of Financial Management since it participated in the Apollo Series 2012-1 Trust prime RMBS issue at the end of August last year. In that transaction, the AOFM purchased $17.5 million of the Class AB notes.Throughout the remainder of the year, the AOFM sought to participate in the SMHL Securitisation Fund 2012-2, the IDOL Trust Series 2012-2, Light Trust No.4 and the FirstMac Mortgage Funding Trust Series 3-2012 transactions but was unsuccessful in being allocated any RMBS notes.Investor demand was sufficient to outbid the AOFM in each case.The renewed investor interest in RMBS prompted the then treasurer Wayne Swan to direct the AOFM to cease participation in the market on April 9 this year. The AOFM was permitted to retain its existing holdings of RMBS until maturity or else deal with the RMBS as it saw fit.There have been three big months for prime RMBS issuance so far this year. In February, issuance totalled $5.5 billion, including the $2.1 billion and $2.5 billion issues from Westpac and CBA, respectively.The same two issuers drove issuance volumes in August and September. CBA raised $3.2 billion in August via the Medallion Trust Series 2013-2, and Westpac raised $2.25 billion the following month via the Series 2013-2 WST Trust.In each of these issues the participation of banks, as balance sheet purchasers (as the process is referred to), was significant. In the Westpac transactions, banks accounted for 70 per cent of the issuance volume, and, in the CBA transactions, banks accounted for 75 per cent.Other bank issuers also enjoyed a high level of take up by bank balance sheets in September.  Macquarie Bank reported 70 per cent balance sheet participation in its $1.25 billion PUMA Series 2013-1 issue, and AMP Bank said balance sheet buyers accounted for 67 per cent of its $650 million issue via the Progress 2013-1 Trust.Suncorp may or may not have attracted as much interest for its Apollo Series 2013-1