You can actually do better than both those rates as a 4 year for 2.77% and a 5 year for 2.89% is available. For the purposes of this calculation, i'll use the rates you quoted in your post.
At the end of 4 years, you will save $1,866.77 on the 4 year at 2.79% vs. the 5 year at 2.99% (based on a $250,000 mortgage amortized over 15 years). The break even rate is 4.13%. This means, at the end of the 4 year term, the 1 year fixed rate (to round out the 5 years) would have to be greater than 4.13% for the 5 year fixed to be the better option. While 4 years is a very long time and anything can happen, the 4 years comes across as a more attractive option.
Hope this helps!
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Paul Meredith
Mortgage Broker
CityCan Financial (est 1976)
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