I went through this about a year and a half ago when I refi'd with SoFi. I went variable because it was (same as your sister's husband's scenario) about 2% less. My thinking was if I could get a few years at the lower rate before it crept up to the fixed rate then I would have won. Even if it goes above the fixed in a few years, it is still lower than what you were paying before so it is still a win, especially because you will have hopefully chipped a significant amount off the principle by then.
Maybe the rates will shoot up next week, I don't know, but I was willing to roll the dice then and probably still would roll the dice now. I don't see the Fed raising the rate significantly before the end of Obama's presidency which buys you another year and a half (i know fed rate vs LIBOR...etc...but they are still somewhat tied together if not officially).