There was a major omission from many of today’s flood of reports on a survey claiming a rise in Australian home prices over the next three years.

The report was commonly sourced to either QBE BIS Shrapnel, QBE, and or BIS Shrapnel, or QBE LMI. Only one of those is accurate.

Spot it in the following three examples. First, this effort from the Courier Mail: “The latest QBE LMI Australian Housing Outlook Report, prepared by BIS Shrapnel, predicts that Perth, Sydney and Adelaide will record the strongest growth levels in the next three years.”

This report from the Fairfax broadsheets this morning: “A QBE Housing Outlook 2010-13 survey compiled by BIS Shrapnel forecasts house price growth of between 9 and 20 per cent in Australia’s capitals over the next three years, the result of a stronger economy and under supply of housing.”

And this report from the Melbourne Herald Sun: “In a report commissioned by QBE, BIS Shrapnel forecast that median house prices in Perth, Sydney and Adelaide would jump by about 20 per cent by mid-2013.”

The Courier Mail correctly named the source as QBE LMI, the other reports just plain got the source wrong and compounded that by not explaining who LMI is and why it had a vested interest in rising house prices. The release correctly names the authorship and ownership of the report: “QBE LMI’s Australian Housing Outlook report (researched and written by BIS Shrapnel) .”

The Courier Mail correctly named the report, but didn’t explain who LMI is.

Well, it’s the mortgage insuring subsidiary of QBE:

“QBE LMI is a member of the QBE Insurance Group, Australia’s largest international insurance and reinsurance group and a top 25 global insurer that has been providing insurance for over 120 years, so we’re here for the long haul!”

And this from the website

“Helping more people achieve the dream of home ownership.

Operating for over 45 years, QBE LMI has combined its risk management expertise, depth and breadth of market knowledge and financial strength to serve the evolving needs of our clients through all stages of the economic cycle.

Our clients can be confident that QBE LMI will deliver innovative service and flexible products for mortgage risk management. “

The 45 years isn’t strictly true, well for the QBE part. It took over a company called PMI about two years ago  when the US parent almost went to the wall in the subprime mortgage collapse. PMI’s name was changed to LMI. It includes the old mortgage insurance businesses of the AMP and CGU, which were taken over by the former US parent.

So in the spirit of maintaining some accuracy, don’t you think that a report sponsored by a mortgage insurer forecasting price rises, is a tiny bit misleading?

If they forecast price falls, it might raise questions about rising claims on PMI under its mortgage insurance policies mostly bought for home purchases where the Loan to Valuation Ratio is 80% or more. (This website explains the idea.

So it’s in the interest of QBE LMI to keep the populace thinking that home prices won’t fall, but will in fact keep rising, thereby generating more income and greater profits; rising prices will crimp housing affordability and force more buyers, especially younger, first or second buyers to take out Lenders Mortgage Insurance, which is actually paid by the borrower, another example of how what you read in finance documents is not the reality.

What would have been interesting is whether this report would have seen the light of day if BIS Shrapnel had forecast price falls. But then BIS Shrapnel rarely forecasts bad news, its reports seem to be eternally optimistic.

This report was designed to feed the feeling that house prices are rising and will go on rising, and ignore the fact that recently they’ve eased a bit, which could continue for a couple of more quarters. But falling house prices is bad news for mortgage insurers, isn’t it?