OK, I finally resolved my issue with physics objecs.
My game is a stealth game so once the player triggers an alarm additional reinforcements get spawned. As an optimisation I pre-spawn all the reinforcements, teleport them outside of level bounds and deactivate them. So that there’s no performance hit when they get spawned at runtime. In 4.21 I spawned them at their spawn points and then called “Set Actor Location” with “Teleport” checked to move them out of bounds. And that apparently caused all the physics objects to freak out in 4.22.
So now I’m spawning them out of bounds directly and physics objects no longer freak out.
So yeah - if something similar happens in your project then check if it’s related to actor movement/teleportation.