ME Bank has set a new benchmark for the pricing of residential mortgage-backed securities, paying just 75 basis points over the swap rate on the senior notes of its latest securitisation issue. At that margin, ME Bank is paying less for RMBS funding than Westpac and Commonwealth Bank paid earlier this year.It may be the cheapest securitisation funding since the financial crisis.ME Bank upsized the issue, SMHL Series Securitisation Fund 2014-1, from A$500 million at the launch last week to $1.45 billion. Thirty-three investors participated in the transaction.Pricing on the $1.3 billion of A1 notes, which have a weighted average life of 2.7 years, was 75 bps over the one-month bank bill swap rate.Pricing on the $89.7 million of AB notes, which have a weighted average life of 5.1 years, was 140 bps over the swap rate.Pricing on the $19 million of B1 notes, which have a weighted average life of 5.1 years, was 205 bps over swap. And pricing of the $7.2 million of B2 notes, which also have a weighted average life of 5.1 years, was 250 bps.Before the ME Bank deal, the sharpest RMBS pricing was 78 bps that Westpac paid on the $2.3 billion of A notes it issued as part of WST 2014-1 Trust in May.Commonwealth Bank paid 80 bps on the $1 billion of A notes it issued as part of Medallion Trust Series 2014-1 in February.In other recent deals Macquarie Group paid 79 bps on the senior notes of a Puma Trust issue earlier this month and ING Direct paid 83 basis points on the senior notes of an Idol Trust issue last month.ME Bank's general manager markets, John Caelli, said the fall in funding costs this year reflected strong demand in the financial market for assets generating yield."If you look at the credit market, the RMBS segment has lagged for some time. What we are seeing now is a catch-up," he said.Caelli said demand for the SMHL notes was strong right across the structure. The AB, B1 and B2 notes were all oversubscribed."We have been a strong issuer in the market for some time. The brand is well regarded and we have one of the better performing pools," he said.