You have to assume that near term the trend in short term rates is down and therefore long term rates and it should remain that way for a while. So on that basis you go with an ARM. However the spread between ultra short term rates and short term rates is widening. That makes predictions harder.

The above is not necessarily the best way to make the decision. The decision is more importantly based on what kind of a deal you made on renegotiati...

You have to assume that near term the trend in short term rates is down and therefore long term rates and it should remain that way for a while. So on that basis you go with an ARM. However the spread between ultra short term rates and short term rates is widening. That makes predictions harder.

The above is not necessarily the best way to make the decision. The decision is more importantly based on what kind of a deal you made on renegotiating the mortgage (some do not realize these can be negotiated sometimes) and how well are you within the traditional measures for the amount of home you are buying. If you can get a good deal on changing it when the time comes, then ARM again. If you are close to the amount of home you can afford, then there is no choice. You must go fixed.
Hope this helps.