A ferrofluid sensor assembly includes a permanent magnet which is supported in a hermetically-sealed housing by ferrofluid rings at each end of the magnet. However, the housing is large enough that the ferrofluid rings do not seal the end of the magnet against the walls of the housing. The housing is filled with a non-magnetic liquid that is immiscible with the ferrofluid. The nonmagnetic liquid wets the walls of the housing such that the ferrofluid rides on the thin film of the nonmagnetic liquid. The non-magnetic fluid is selected to have low viscosity, so that the magnet has a fast response time.