Hide home indicator in xib file
Ran into this same issue. There's no need for hacks or changes to the file.
If the size is set to 'Freeform' and the bar is still showing. Just navigate away from the file and reopen it. The bar will no longer appear.
Not sure what triggered it, but one hack is to hit the button on the bottom left that shows you what you are viewing as (e.g. View as: iPhone 11 (wC hR) in my case).
In my case I chose the dark interface style temporarily, then switched back to the normal style, and also did the same with different devices (chose a random one, and then back to the iPhone 11), this eventually caused the bar to disappear for good (e.g. even if I close and re-open the xib file).