The $4,000 you'll save is if, and only if, you get to keep the 1.99% rate for the entire 36 months, when the likelyhood that the rate will go up over the next three years is very high. You might get away with keeping your rate of 1.99% for the next six months, but what about the next 2 and 1/2 years? Anytime the prime rate will go up, your potential $4,000 saving will shrink. Along with that, you run the risk of getting a higher mortgage rate at the end of the 36 month term, when you can enjoy the 2.79% rate for an extra year.
For that amount of money (not that much when you think about it) and the hassle involved of switching your mortgage to another bank, I'd stay with the fixed rate of 2.79% for the 4 years that are left.