“But why would he take that ARM when he could get a fixed for that rate and lock it in for 30 years?”
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Because if he went conventional 30 yr fixed he would be paying principal as well, which on a median SD purchase probably would have bumped the monthly payment up by about $500/month. I think alot of the ARMS were interest only.

FSD has a good handle on the reset issue. As for how long LIBOR can remain at historically very low levels, we just had a 4 year run of very low rates earlier this decade. How far will LIBOR drop and how long will it stay low this time around? Who knows?