Babylon uses a variable framerate by default, which is what causes the apparent jitter. Enabling deterministic lockstep will remove the jitter.
However, in your onAfterPhysicsObservable, you’re teleporting every body every step; this will cause problems for both performance and behaviour, in any physics engine, not just Havok. I strongly recommend you do not do this to the physics - simulate physics with a fixed coordinate system and transform the coordinates wherever your application needs to present them.