Freddie Mac Chief Economist Frank Nothaft said interest rates on a 30-year fixed mortgage is likely to remain below 5% throughout 2011 as the economic recovery accelerates. In November, mortgage interest rates hit their lowest levels since the 1950's, according to the Freddie Mac weekly survey. The 30-year FRM rate averaged 4.17% for the week ending Nov. 11. But they have since climbed, with the fixed-rate mortgage averaging 4.46% for the week ending Dec. 2. Nothaft said with the Federal Reserve's intent on keeping the federal funds rate between 0% and 0.25%, compressed mortgage rates will continue through 2011. "While some rise in fixed-rates is expected, 30-year fixed-rate loans are likely to remain below 5% throughout the year, and initial rates on 5/1 hybrid ARMs will likely remain below 4% in 2011," Nothaft said in a perspective released Monday. As for home prices, Nothaft said local markets with large inventories of for-sale homes and REO properties will continue to see weakness in 2011. "However, price indexes for the U.S. as a whole are likely close to bottoming out," Nothaft said. Originations should shrink in 2011 as the refinancing boom burns out and the Home Affordable Refinance Program expires June 30, 2011. And while interest rates will remain below 5%, Nothaft said waning refinances will offset any new pickup in purchase-money originations. But while new lending will be down, Nothaft said Freddie Mac delinquency rates will continue to decline as employment improves. The unemployment rate currently stands at 9.8%, and Fed Chairman Ben Bernanke doesn't see a return to normal levels for another four to five years. Regardless, Nothaft said declines in delinquencies are coming. "Look for the seriously delinquent rate in the overall market to gradually decline further during 2011, reflecting employment gains and family income growth, additional loan modifications and other foreclosure alternatives, and the transition of foreclosed homes to REO," Nothaft said. Write to Jon Prior.