It’s one of the world’s foremost financial institutions, and has been dubbed the most powerful single player on the international stage. Barclays Bank is a truly enormous concern, and the bank’s long history of financial expertise enables it to remain an influential figure in everyday life. From high-profile acquisitions to flexible corporate finance, to investment solutions and personal mortgage offerings, Barclays Bank is a master of all trades. It’s a little daunting to think that something as personally important as a private mortgage could be only the tiniest part of the lender’s business; even the largest residential loan pales into comparison with the sums that Barclays Bank handles on a daily basis. However, this bank has a heritage rooted in innovation and personal attention, which lets it address the needs of every customer, whether they’re a multinational corporation or a couple buying their first home.
The bank that would become the Barclays we know today began in 1690 in London, when John Freame and Thomas Gould founded a goldsmith’s in Lombard Street. A year later, Lloyd’s Coffee House set up their headquarters on the same road, going on to become the still-famous insurance market Lloyd’s of London. Lombard Street has remained the spiritual home of the UK banking industry, and many financial institutions can trace their lineage back to an address on Lombard Street.
Not until 1736 was there a Barclay in Barclays: James Barclay, John Freame’s son in law, joined the family business at 54 Lombard Street. Over the next century, the bank became known as “Barclay, Bevan and Benning”, the names of the bank’s three proprietors.
At this time, the UK banking system was characterised by huge diversity – there were hundreds of private banks, all of them offering their own banknotes, and all of them operating differently. Barclays gradually grew, expanding its operations by merging with various small, private banks. This allowed them to extend their business, reaching more customers and becoming a much larger bank in their own right. One of their most significant expansions was the acquisition in 1936 of the Central Exchange Bank of India, which had opened earlier that year in London. Barclays’ forays into foreign banking continued with the founding of the Barclays DCO – Dominion, Colonial and Overseas, a branch of the bank specifically dedicated to catering for foreign clients.
Over the course of the 20th Century, Barclays Bank went from strength to strength, acquiring new businesses and expanding its operations until it became the one of the most powerful institutions in the world; in 2011, a paper by Vitali claimed that Barclays was the most influential organisation in the world, with more power to control global markets than any nation. Not bad, for a 17th Century goldsmiths!
With its long history and heritage roots, you could be forgiven for imagining that Barclays Bank have been content to plod along in the same groove for hundreds of years, gradually accruing wealth. However, in the financial world, it’s not enough to simply follow the pack and hope for the best; those who lead, succeed, and innovation is key when it comes to building a business empire. Barclays has proven itself to be a highly inventive corporation, and has led the way in numerous developments which we take for granted today.
In 1958, Barclays appointed Hilda Harding as the manager of their Hanover Square branch in London. At the time, this was unprecedented; she was the very first female bank manager ever. It seems strange to us now that women would be excluded from such a role, and that it would take until the mid-20th century for this to change, but the impact of World War 2 dramatically shifted people’s perceptions of what women were capable of. Harding went on to manage the branch until retirement in 1970.
Besides being social forward-thinking, Barclays has also demonstrated a flair for taking advantage of new technology as it becomes available. In 1966, Barclays released the Barclaycard, the UK’s first ever credit card. For the first time, consumers were able to quickly and easily pay for whatever they wanted, and could even stretch beyond their means, buying what they needed today with the security of future earnings. This freedom from the rigidity of traditional cash flows allowed shoppers to make decisions about what to buy and when, without having to ensure that their account held enough to cover the cost immediately.
Credit cards were followed in the 1980s by debit cards, which were introduced as a means to reduce the cost of banks processing cheques. Again, Barclays led the field in this new technology, and their Connect card, introduced in 1987, was the very first card of its type in the UK. Because it can deduct payments directly from a shoppers account, the transaction speed is much faster than that which can be achieved with cheques, making commerce much faster, smoother and cheaper to arrange.
Barclays also developed the very first cash machine in the UK, which was placed in Enfield. Interestingly, the very first person to use it was none other than the famous actor Reg Varney, the protagonist of classic British sitcom On the Buses. Along with Sainsbury’s, Barclays were one of the very earliest pioneers of cashpoint technology, and went on to introduce many thousands of these units across the nation. Now ubiquitous, it’s hard to imagine what life would be like without a cashpoint on every corner, but Barclays were one step ahead of the curve and saw what the future would hold.
In the 21st Century, Barclays have once again stepped up to remain at the head of the pack; they have enabled both contactless and Apple Pay to be used with their accounts, providing their customers with unprecedented flexibility.
So Barclays Bank is one of the leading lights of the financial world, and one of the prime movers and shakers in international commerce. But where does that leave the everyday folk? It’s all very well financing multi-billion pound purchases from a skyscraper in Canary Wharf, but if your business can’t handle the bread and butter of financing the little people it’s going to fall short. Luckily, Barclays Bank is one of the foremost mortgage providers in the UK today, and offers a wide range of options for different types of homeowners. Whether you’re looking for a first home, to refinance your property or a buy to let solution, Barclays Bank has a multitude of options to suit.
There is no “average buyer” for a home; everyone has a different budget, different needs, and different abilities to repay. Therefore, there can’t be a “one size fits all” mortgage – there have to be different types to fit different situations, as what suits one buyer perfectly might be completely untenable for another. With this in mind, it’s clear to see why banks offer so many different variations on their mortgage products, but it can still be hard to discern what the different advantages are of each product, and who exactly they are designed for. However, Barclays have broken down their different products into categories according to the type of buyer who will find them appropriate:
Buying a first home is a daunting procedure, as everything seems to cost such a huge amount of money. At every turn there are more hands dipping into your pocket – stamp duty, solicitors fees, survey fees, registration fees . . . the list goes on. Knowing where you stand with your mortgage is key, because you’ll need to be able to budget effectively in order to ensure you can meet all your payments. The Barclays Mortgage First Time Buyer section is illuminating and clear, and it gives buyers a comprehensive understanding of their different options.
This type of mortgage will be familiar to anyone who’s taken out a smaller loan; the money is lent at an agreed interest rate, which is to be repaid at regular intervals. The interest rate never varies, as it’s “fixed” at the agreed rate. Fixed-rate mortgages work in the same way, and allow homeowners to confidently budget for the future; their interest payments won’t fluctuate over time, so they don’t have to worry about increases in the national inflation rate. Conversely, however, they won’t benefit from a decrease in interest rates, should they fall, so a fixed-rate mortgage can potentially cause buyers to miss out on cheaper rates in the future. Fixed-rate mortgages are typically offered for a restricted time, and Barclays offer periods of between 2 and 10 years. Once this period expires, the mortgage will then default to the Barclays Standard Variable Rate.
A Standard Variable Rate mortgage (commonly abbreviated as an SVR) is a lender’s preferred mortgage product. Because they can vary the rate at will, they’re able to alter the interest they’re charging to reflect market conditions, either to maximise their profits or to attract new customers. Sitting halfway between this and the fixed rate mortgage is the “tracker” mortgage.
A tracker mortgage means that the interest rate of your mortgage will exactly follow that of the Bank of England Base Rate (BBR), the standard from which all other interest rates are calculated. This means that there is an additional degree of stability, because the Bank of England base rate rarely changes quickly, and it means you’ll always have a competitively-priced mortgage.
Tracker mortgages are typically expressed as a percentage above the BBR, so a mortgage might be advertised as having an interest rate of BBR + 3%. If the BBR is 0.25%, then the total interest rate is 3.25% - if the BBR increases to 1%, then the total interest rate will be 4%. Tracker mortgages offer a greater degree of predictability and stability than SVRs, but not as much as a fixed rate mortgage. They do, however, allow some degree of flexibility, and homeowners with a tracker mortgage can expect to benefit from a fall in interest rates.
The most important part of any mortgage is the deposit; generally speaking, a larger deposit is a way to get a better deal on your interest rate. However, first time buyers are often limited in the amount of cash they can lay their hands on, and can struggle to put together a sum large enough to secure the property they need.
One of the most innovative ways in which Barclays is helping first time buyers to get on to the property ladder is by allowing their parents or guardians to assist them directly. The family springboard scheme allows for buyers to purchase a home without a deposit at all, as long as they have arranged for 10% of the property to be funded by another party. This other party’s money essentially then constitutes part of the loan to the buyers, and is repaid over the course of several years with interest, just as with the rest of the mortgage.
This combination of parental assistance and financial flexibility makes it even easier for first time buyers to pick out the house they want, without having to scrape together a deposit of their own beforehand. Interestingly, this mortgage reverts to a tracker interest rate when the initial deposit has been repaid, unlike most mortgages which default to an SVR. This can make it a good option for buyers who want the security and stability that a tracker mortgage offers, combined with the flexibility of buying without a deposit of their own.
In recent years, buy to let has become one of the foremost areas of the property market. The seemingly unstoppable rise of house prices in the UK has driven more and more people to invest in their own rental properties, looking to make a profit or just to pay off their mortgage. Although this practise has slowed somewhat in 2016, thanks to regulatory changes by the UK Government, the buy to let market is still very much alive and well, and loans are still in great demand.
Barclays Bank Buy to Let mortgages are available in the same flavours as their residential mortgages; fixed, tracker and SVR interest rates are all on offer. The main difference between acquiring a loan for a private home and for a rental property is in the more stringent requirements; typically, a salary of £25,000 is mandatory before a buy to let loan will be approved, as is proof that you expect to receive more than enough rental income to cover your mortgage costs (125% is the current limit, though this is set to rise in 2017).
As a leading high street bank, Barclays can often offer deals to competitor’s customers which provide better options than their current providers do. As such, Barclays offer a swift, pain-free switching option, which allows customers of other lenders to take advantage of the many different products in the Barclays Bank range.
Switching customers have access to the full range of Barclays Bank mortgage options, which includes the fixed, tracked and variable rates discussed above. However, they are also able to take advantage of the Barclays Bank offset option, an ingenious method for providing homeowners with flexibility and security simultaneously.
The trouble with most mortgage payment plans is that they’re inflexible; homeowners need to meet their regular payments without fail, but have no option to over or under pay. There are often few ways for borrowers to minimise their costs, and they’re usually stuck with the same mortgage bill for years. An offset mortgage, however, allows borrowers to reduce their mortgage bill by offsetting their savings against their outstanding loan.
For example, if a homeowner owes £125,000 on their mortgage but has £25,000 in a linked Barclays Bank account, their mortgage interest will only be calculated on £100,000. This saves 20% on their interest bill – not bad, and even better when you consider that the money isn’t tied up and inaccessible; it’s a regular current account, and if urgent repairs or a holiday are needed there’s nothing to stop it being used for that instead.
Barclays Bank offers a set of high-value mortgages to customers who have proven to be reliable, valuable customers. This set of mortgages is tailored towards higher-end purchases, and can help to finance an expansion up the property ladder, a new holiday home, or a house for the kids. To qualify for this upper tier of lending products, applicants must have a Barclays Bank account into which they pay £75,000 per year, or hold £100,000 worth of savings in a Barclays Bank account.
There are many different forces at play in the modern world, and it’s hard to predict exactly what tomorrow will look like. With the growing pace of technological change being matched by a ferocious drive for new opportunities, Barclays Bank will need to continue acting on its history of innovation in order to maintain its position at the head of the pack.
However, given Barclays Bank’s stature on the world stage, and its continuing ability to modernise and adapt, it seems unlikely that the future will be anything other than bright for Barclays.